CrowdStrike: Short-Term Headwinds Provide Long-Term Opportunity

seekingalpha08-08

CrowdStrike is a leading cybersecurity firm whose valuation has come down tremendously after the worldwide IT outage.CrowdStrike caused widespread computer crashes with a faulty update, impacting ...

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Kencom
·08-09
Yes , reputation took years to build, it is difficult to regain subscribers confidence especially the service which has great impacts that disrupt our daily life. Subscribers would look for alternative services & less reliant on one service. This will open up for stronger competition & offers for the similar services industry.
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alimoo9
·08-08
I do not see anything good here, companies might find other alternatives, the reputational damage is too great to ignore.
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INC","BK4528":"SaaS概念","BK4532":"文艺复兴科技持仓"},"translate_title":"CrowdStrike：短期逆风提供长期机会","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"CRWD":1.1},"content_text":"CrowdStrike is a leading cybersecurity firm whose valuation has come down tremendously after the worldwide IT outage.CrowdStrike caused widespread computer crashes with a faulty update, impacting airports, train stations, and offices.The stock price of CrowdStrike plummeted nearly 15% following the outage, despite being up over 50% year-to-date.We believe that, even when taking all the potential legal repercussions into consideration, CrowdStrike stock is currently a buy.SC STUDIO/iStock via Getty ImagesIntroductionAs you may be aware, CrowdStrike (NASDAQ:CRWD) was the culprit that caused many Windows computers (MSFT) to crash when they pushed an update that contained a system-breaking bug. This meant computers used in airports, train stations, and offices could not work correctly.The monetary consequences of the outages are challenging to estimate, but multiple companies were unable to continue business for just about eight hours of the day. Looking at CrowdStrike's return since the beginning of the year, it is evident that the stock took an extreme hit following the outage. The stock was up more than 50% YTD, but is now down almost 15% in a matter of weeks.Seeking AlphaA drop such as what we have seen for CrowdStrike could present a very rare opportunity to add this stock to your portfolio at a relatively cheap price on a long-term basis.In our previous article on CrowdStrike, we argued that while the business is sound, the stock may have been a bit stretched at the time. Still, recent excellent quarterly earnings have only solidified CrowdStrike as a significant player in the cybersecurity industry.While the events in July were unfortunate and a major bump in the road for CrowdStrike, with chances it can affect business deals in the near term, the long-term growth story remains intact.The main question that needs answering is how big of a hit CrowdStrike will take from possible legal action following the bug, which we will discuss in this article. In addition, we will give a short review of how major financial institutions adjusted their price for CrowdStrike following the incident.But, before we start, let's take a look at the biggest IT security companies by market cap.Stock Info with Company FilingsAs you can see, Palo Alto (PANW) is now by far the biggest, followed by CrowdStrike (CRWD), Fortinet (FTNT), Cloudflare (NET), and Zscaler (ZS). These are all excellent companies, but CrowdStrike was one of the most loved cybersecurity stocks and had a very high valuation multiple associated with it.The recent outage changed this. Let's take a look and find out if CrowdStrike will be significantly impacted.Legal RepercussionsThe aforementioned incident led to approximately 8.5 million Windows devices globally crashing, resulting in significant operational disruptions across multiple sectors, including airlines, banks, healthcare facilities, and emergency services. The immediate financial impact is substantial, with damages potentially exceeding $1B and some estimates suggesting costs could reach as high as $5.4B for Fortune 500 companies alone.This could have far-reaching implications for CrowdStrike, as some analysts have noted that the expenses associated with remedying the situation and the potential loss of customer trust could negatively impact CrowdStrike's financials in the near term. These costs include not only direct remediation efforts but also potential credits, discounts, and free products offered to appease affected customers, which will likely affect the company's margins.The task for CrowdStrike right now is to review its service agreements with customers, as the incident falls under errors and omissions (E&O) liability. E&O insurance protects businesses from claims of negligence, malpractice, and service errors.However, many service agreements limit liability to amounts often lower than actual business interruption losses. This limitation could pose significant financial challenges for CrowdStrike as the actual monetary damages materialize for CrowdStrike. It is possible that insurance policies may cover business interruption or IT failure, but severe cases which the CrowdStrike incident might fall under can result in irreparable damage.CrowdStrike is facing a lawsuit from shareholders who accuse the company of fraudulently concealing its inadequate software testing, which led to the global outage on July 19 that crashed over eight million computers. Filed as a proposed class action in Austin, Texas, shareholders claim they were misled by CrowdStrike's assurances about its technology, which proved false when a flawed update caused widespread disruptions.In addition, CEO George Kurtz was summoned to testify before Congress, and Delta Air Lines has already hired lawyers to seek damages, citing a $500M loss. Litigation is likely, with negligence being a primary legal theory. It is also possible that the incident could result in a class action lawsuit, which raises questions about how CrowdStrike accessed kernel-level updates on Microsoft operating systems without Microsoft's control.Moving forward, there will likely be greater emphasis on cyber insurance policies to prevent such incidents. These policies are becoming more complex and tailored to cover various scenarios, including non-malicious system failures. The incident underscores the importance of robust cyber insurance as a safeguard against large-scale disruptions.Let’s summarize before moving on. The incident poses significant challenges for CrowdStrike, with short-term impacts on the company's reputation and financial health. Regulatory scrutiny, legal battles, and increased insurance complexities will be critical factors in how CrowdStrike navigates this crisis and recovers from its effects. The size of the damage is still somewhat unclear, but we do know that CrowdStrike will have to redeem itself.CrowdStrike Faces Short-Term Challenges, but Long-Term Growth Story Remains IntactFollowing the incident on July 19th, several major financial institutions were quick to re-rate CrowdStrike, mainly citing short-term headwinds. Let's go over the primary ones.After the outage, HSBC Global Research moved CrowdStrike from \"Buy\" to \"Hold\" and cut the price target from $388 to $302. HSBC may have cut the target price, but its analysts still see strong long-term potential. They are worried about near-term risks affecting results and guidance because of the outage, but overall, HSBC has lowered its revenue and earnings expectations for FY25 and FY26.Despite CrowdStrike's quick and transparent response, this incident has hurt its short-term reputation. Ongoing investigations might affect deals closing late in the quarter. Due to these uncertainties, analysts think CrowdStrike might give conservative guidance in its next earnings call.Morgan Stanley is still supportive of CrowdStrike's long-term potential but has taken the company off its \"Top Pick\" list because of the recent stock drop and near-term risks. However, they believe the stock is nearing its bottom and see the recent issues as a temporary setback. They expect CrowdStrike to lose about 20% of new bookings in the second half of 2024 but don’t think many existing customers will switch due to high switching costs. They’ve kept an \"Overweight\" rating with a $360 price target.Jefferies also cut its price target for CrowdStrike, highlighting concerns about a lawsuit involving Delta. However, analyst Joseph Gallo mentioned that while CrowdStrike might not need to reimburse customers for the outage, but the costs of litigation and the CEO's congressional testimony will weigh on the company. They’ve reduced their annual recurring revenue estimates by 1% for FY25 and FY26, lowering the price target from $400 to $300 but still maintaining a \"Buy\" rating.Gallo makes an interesting point that, given that the shares are down over 40% in the past month, CrowdStrike might issue preliminary results to reassure investors. He believes cautious FY25 guidance could help investors support the de-risked numbers.To sum it all up, CrowdStrike faces significant short-term challenges due to the IT outage and ongoing litigation, leading to downgrades, lower price targets, and financial uncertainties. However, their quick response and the high switching costs for existing customers could be their saving grace. Major financial institutions like Morgan Stanley and Jeffries still back CrowdStrike, focusing on its long-term growth potential. While the near future might be tough, CrowdStrike's strong market position and core strengths suggest that its long-term growth story is still solid. Investors should stay updated and keep a long-term view to navigate these challenges.CrowdStrike is still a great companyEven though CrowdStrike's stock has taken a hit recently, there's still much to be optimistic about when considering its long-term growth. Let's break it down in simple terms.First, their year-over-year revenue growth is at a hefty 34.26%. This is way better than the sector median of just 3.54%, showing they’re truly accelerating sales comparatively to their competitors. Looking ahead, they expect revenue to grow by 30.74%, which is still much higher than the average in their sector. Basically, they’re doing a great job and should keep pulling in good revenue.When it comes to running things efficiently, CrowdStrike is killing also in a league of its own. They’re looking at an EBITDA growth of 47.01%, compared to a sector median of just 6.31%. This shows they’re not just growing, but making money while doing it. Their EBIT growth is also strong at 49.31%, which again is much higher than the sector’s 6.79%, showing they’re also managing their costs really well.Seeking AlphaTheir EPS is yet another bright spot. CrowdStrike’s forward diluted EPS growth is expected to be 46.49%, much higher than the sector median. In addition, over the next three to five years, they expect an EPS growth rate of 37.24%, compared to the sector’s 14.49%. This is great to see if you want to add CrowdStrike to your long-term portfolio.Financially, they’re in a good spot, too. Their levered FCF margin is 34.21%, way higher than the sector median of 10.02%, highlighting their ability to generate cash from their operations, which they can reinvest or give back to shareholders at far better efficiency than the sector. Their cash from operations is a whopping $1.25B, compared to the sector median of $97.94M, showing they have a lot of money coming in to keep things running and fund future growth.Lastly, they have $15.22 cash per share, way above the sector median of $2.01. This gives them strong liquidity and financial flexibility.So, while CrowdStrike's stock has dipped recently, its strong revenue and earnings growth, solid cash flow, and efficient operations suggest that its long-term growth story is still very much alive. Investors should consider these strengths when considering the company’s future potential.If we take a short look at CrowdStrike’s chart on the 1-hour timeframe, we may be able to identify an interesting level where a buying opportunity could present itself. To keep it simple, we have identified some key support and resistance levels and coupled them with Fibonacci numbers from last year's lows to the most recent highs.Stock Info with TradingViewAs the stock price is approaching $200, we can see that this price was previously a major level where the stock was bid, and this price also coincides very well with the 0.236 Fibonacci, at $201.61.While the stock is definitely in a free fall at this point, we still like it long-term and would give CrowdStrike a buy rating at $200. Yes, this upcoming quarter may present some challenges for CrowdStrike. Still, simultaneously, the market could far overestimate the repercussions, meaning $200 could be a bargain for a growth stock such as CrowdStrike.ConclusionSo, while CrowdStrike's recent IT mishap has thrown a wrench into their short-term plans, there’s still a lot to like about their long-term potential. The company faces some immediate hurdles, like potential lawsuits and a hit to their reputation, but they’ve also shown they can respond quickly and transparently.Big players like Morgan Stanley (MS) and Jefferies still see them as a solid bet for the future, even if the next few months are rocky. If you’re thinking long-term, CrowdStrike’s strong fundamentals and market position might make it worth watching.For those reasons, and the fact the stock has already sold off, we give CrowdStrike a buy rating at the current levels - particularly with $200 being an ideal price to add to your portfolio.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":336375111680280,"gmtCreate":1723159017896,"gmtModify":1723159022480,"author":{"id":"4088748055325860","authorId":"4088748055325860","name":"Kencom","avatar":"https://community-static.tradeup.com/news/bcaa9548fb78e0409a2827c590935dab","vip":1,"crmLevel":7,"crmLevelSwitch":1,"idStr":"4088748055325860","authorIdStr":"4088748055325860"},"htmlText":"Yes , reputation took years&nbsp; to build, it is difficult to regain subscribers confidence especially the service which has great impacts that disrupt our daily life.&nbsp; Subscribers would look for alternative services &amp; less reliant on one service. This will open up for stronger competition &amp; offers for the similar services industry.","listText":"Yes , reputation took years&nbsp; to build, it is difficult to regain subscribers confidence especially the service which has great impacts that disrupt our daily life.&nbsp; Subscribers would look for alternative services &amp; less reliant on one service. This will open up for stronger competition &amp; offers for the similar services industry.","text":"Yes , reputation took years to build, it is difficult to regain subscribers confidence especially the service which has great impacts that disrupt our daily life. Subscribers would look for alternative services & less reliant on one service. This will open up for stronger competition & offers for the similar services industry.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/336375111680280","repostId":2457522827,"repostType":2,"repost":{"id":"2457522827","pubTimestamp":1723088463,"share":"https://ttm.financial/m/news/2457522827?lang=&edition=fundamental","pubTime":"2024-08-08 11:41","market":"nz","language":"en","title":"CrowdStrike: Short-Term Headwinds Provide Long-Term Opportunity","url":"https://stock-news.laohu8.com/highlight/detail?id=2457522827","media":"seekingalpha","summary":"CrowdStrike is a leading cybersecurity firm whose valuation has come down tremendously after the worldwide IT outage.CrowdStrike caused widespread computer crashes with a faulty update, impacting airp","content":"<html><head></head><body><ul style=\"\"><li><p>CrowdStrike is a leading cybersecurity firm whose valuation has come down tremendously after the worldwide IT outage.</p></li><li><p>CrowdStrike caused widespread computer crashes with a faulty update, impacting airports, train stations, and offices.</p></li><li><p>The stock price of CrowdStrike plummeted nearly 15% following the outage, despite being up over 50% year-to-date.</p></li><li><p>We believe that, even when taking all the potential legal repercussions into consideration, CrowdStrike stock is currently a buy.</p></li></ul><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/a262bc808484054bdb2b450f59af010a\" tg-width=\"750\" tg-height=\"500\"/></p><p>SC STUDIO/iStock via Getty Images</p><p></p><h2 id=\"id_3716283991\">Introduction</h2><p>As you may be aware, CrowdStrike (NASDAQ:CRWD) was the culprit that caused many Windows computers (MSFT) to crash when they pushed an update that contained a system-breaking bug. This meant computers used in airports, train stations, and offices could not work correctly.</p><p>The monetary consequences of the outages are challenging to estimate, but multiple companies were unable to continue business for just about eight hours of the day. Looking at CrowdStrike&#39;s return since the beginning of the year, it is evident that the stock took an extreme hit following the outage. The stock was up more than 50% YTD, but is now down almost 15% in a matter of weeks.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/4a90ea90d9d8b5b8414e162b55313ff4\" tg-width=\"640\" tg-height=\"217\"/></p><p>Seeking Alpha</p><p></p><p>A drop such as what we have seen for CrowdStrike could present a very rare opportunity to add this stock to your portfolio at a relatively cheap price on a long-term basis.</p><p>In our previous article on CrowdStrike, we argued that while the business is sound, the stock may have been a bit stretched at the time. Still, recent excellent quarterly earnings have only solidified CrowdStrike as a significant player in the cybersecurity industry.</p><p>While the events in July were unfortunate and a major bump in the road for CrowdStrike, with chances it can affect business deals in the near term, the long-term growth story remains intact.</p><p>The main question that needs answering is how big of a hit CrowdStrike will take from possible legal action following the bug, which we will discuss in this article. In addition, we will give a short review of how major financial institutions adjusted their price for CrowdStrike following the incident.</p><p>But, before we start, let&#39;s take a look at the biggest IT security companies by market cap.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/586ed0e5afc65a56aca6d0a7fefa6e71\" tg-width=\"640\" tg-height=\"311\"/></p><p>Stock Info with Company Filings</p><p></p><p>As you can see, Palo Alto (PANW) is now by far the biggest, followed by CrowdStrike (CRWD), Fortinet (FTNT), Cloudflare (NET), and Zscaler (ZS). These are all excellent companies, but CrowdStrike was one of the most loved cybersecurity stocks and had a very high valuation multiple associated with it.</p><p>The recent outage changed this. Let&#39;s take a look and find out if CrowdStrike will be significantly impacted.</p><h2 id=\"id_3821153037\">Legal Repercussions</h2><p>The aforementioned incident led to approximately 8.5 million Windows devices globally crashing, resulting in significant operational disruptions across multiple sectors, including airlines, banks, healthcare facilities, and emergency services. The immediate financial impact is substantial, with damages potentially exceeding $1B and some estimates suggesting costs could reach as high as $5.4B for Fortune 500 companies alone.</p><p>This could have far-reaching implications for CrowdStrike, as some analysts have noted that the expenses associated with remedying the situation and the potential loss of customer trust could negatively impact CrowdStrike&#39;s financials in the near term. These costs include not only direct remediation efforts but also potential credits, discounts, and free products offered to appease affected customers, which will likely affect the company&#39;s margins.</p><p>The task for CrowdStrike right now is to review its service agreements with customers, as the incident falls under errors and omissions (E&amp;O) liability. E&amp;O insurance protects businesses from claims of negligence, malpractice, and service errors.</p><p>However, many service agreements limit liability to amounts often lower than actual business interruption losses. This limitation could pose significant financial challenges for CrowdStrike as the actual monetary damages materialize for CrowdStrike. It is possible that insurance policies may cover business interruption or IT failure, but severe cases which the CrowdStrike incident might fall under can result in irreparable damage.</p><p>CrowdStrike is facing a lawsuit from shareholders who accuse the company of fraudulently concealing its inadequate software testing, which led to the global outage on July 19 that crashed over eight million computers. Filed as a proposed class action in Austin, Texas, shareholders claim they were misled by CrowdStrike&#39;s assurances about its technology, which proved false when a flawed update caused widespread disruptions.</p><p>In addition, CEO George Kurtz was summoned to testify before Congress, and Delta Air Lines has already hired lawyers to seek damages, citing a $500M loss. Litigation is likely, with negligence being a primary legal theory. It is also possible that the incident could result in a class action lawsuit, which raises questions about how CrowdStrike accessed kernel-level updates on Microsoft operating systems without Microsoft&#39;s control.</p><p>Moving forward, there will likely be greater emphasis on cyber insurance policies to prevent such incidents. These policies are becoming more complex and tailored to cover various scenarios, including non-malicious system failures. The incident underscores the importance of robust cyber insurance as a safeguard against large-scale disruptions.</p><p>Let’s summarize before moving on. The incident poses significant challenges for CrowdStrike, with short-term impacts on the company&#39;s reputation and financial health. Regulatory scrutiny, legal battles, and increased insurance complexities will be critical factors in how CrowdStrike navigates this crisis and recovers from its effects. The size of the damage is still somewhat unclear, but we do know that CrowdStrike will have to redeem itself.</p><h2 id=\"id_1113889528\">CrowdStrike Faces Short-Term Challenges, but Long-Term Growth Story Remains Intact</h2><p>Following the incident on July 19th, several major financial institutions were quick to re-rate CrowdStrike, mainly citing short-term headwinds. Let&#39;s go over the primary ones.</p><p>After the outage, HSBC Global Research moved CrowdStrike from &#34;Buy&#34; to &#34;Hold&#34; and cut the price target from $388 to $302. HSBC may have cut the target price, but its analysts still see strong long-term potential. They are worried about near-term risks affecting results and guidance because of the outage, but overall, HSBC has lowered its revenue and earnings expectations for FY25 and FY26.</p><p>Despite CrowdStrike&#39;s quick and transparent response, this incident has hurt its short-term reputation. Ongoing investigations might affect deals closing late in the quarter. Due to these uncertainties, analysts think CrowdStrike might give conservative guidance in its next earnings call.</p><p>Morgan Stanley is still supportive of CrowdStrike&#39;s long-term potential but has taken the company off its &#34;Top Pick&#34; list because of the recent stock drop and near-term risks. However, they believe the stock is nearing its bottom and see the recent issues as a temporary setback. They expect CrowdStrike to lose about 20% of new bookings in the second half of 2024 but don’t think many existing customers will switch due to high switching costs. They’ve kept an &#34;Overweight&#34; rating with a $360 price target.</p><p>Jefferies also cut its price target for CrowdStrike, highlighting concerns about a lawsuit involving Delta. However, analyst Joseph Gallo mentioned that while CrowdStrike might not need to reimburse customers for the outage, but the costs of litigation and the CEO&#39;s congressional testimony will weigh on the company. They’ve reduced their annual recurring revenue estimates by 1% for FY25 and FY26, lowering the price target from $400 to $300 but still maintaining a &#34;Buy&#34; rating.</p><p>Gallo makes an interesting point that, given that the shares are down over 40% in the past month, CrowdStrike might issue preliminary results to reassure investors. He believes cautious FY25 guidance could help investors support the de-risked numbers.</p><p>To sum it all up, CrowdStrike faces significant short-term challenges due to the IT outage and ongoing litigation, leading to downgrades, lower price targets, and financial uncertainties. However, their quick response and the high switching costs for existing customers could be their saving grace. Major financial institutions like Morgan Stanley and Jeffries still back CrowdStrike, focusing on its long-term growth potential. While the near future might be tough, CrowdStrike&#39;s strong market position and core strengths suggest that its long-term growth story is still solid. Investors should stay updated and keep a long-term view to navigate these challenges.</p><h2 id=\"id_2673498749\">CrowdStrike is still a great company</h2><p>Even though CrowdStrike&#39;s stock has taken a hit recently, there&#39;s still much to be optimistic about when considering its long-term growth. Let&#39;s break it down in simple terms.</p><p>First, their year-over-year revenue growth is at a hefty 34.26%. This is way better than the sector median of just 3.54%, showing they’re truly accelerating sales comparatively to their competitors. Looking ahead, they expect revenue to grow by 30.74%, which is still much higher than the average in their sector. Basically, they’re doing a great job and should keep pulling in good revenue.</p><p>When it comes to running things efficiently, CrowdStrike is killing also in a league of its own. They’re looking at an EBITDA growth of 47.01%, compared to a sector median of just 6.31%. This shows they’re not just growing, but making money while doing it. Their EBIT growth is also strong at 49.31%, which again is much higher than the sector’s 6.79%, showing they’re also managing their costs really well.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/8e9732b069b510134901fdb28352d6b5\" tg-width=\"640\" tg-height=\"474\"/></p><p>Seeking Alpha</p><p></p><p>Their EPS is yet another bright spot. CrowdStrike’s forward diluted EPS growth is expected to be 46.49%, much higher than the sector median. In addition, over the next three to five years, they expect an EPS growth rate of 37.24%, compared to the sector’s 14.49%. This is great to see if you want to add CrowdStrike to your long-term portfolio.</p><p>Financially, they’re in a good spot, too. Their levered FCF margin is 34.21%, way higher than the sector median of 10.02%, highlighting their ability to generate cash from their operations, which they can reinvest or give back to shareholders at far better efficiency than the sector. Their cash from operations is a whopping $1.25B, compared to the sector median of $97.94M, showing they have a lot of money coming in to keep things running and fund future growth.</p><p>Lastly, they have $15.22 cash per share, way above the sector median of $2.01. This gives them strong liquidity and financial flexibility.</p><p>So, while CrowdStrike&#39;s stock has dipped recently, its strong revenue and earnings growth, solid cash flow, and efficient operations suggest that its long-term growth story is still very much alive. Investors should consider these strengths when considering the company’s future potential.</p><p>If we take a short look at CrowdStrike’s chart on the 1-hour timeframe, we may be able to identify an interesting level where a buying opportunity could present itself. To keep it simple, we have identified some key support and resistance levels and coupled them with Fibonacci numbers from last year&#39;s lows to the most recent highs.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/7903f61d6b700985fc85c91d90ea1cda\" tg-width=\"640\" tg-height=\"272\"/></p><p>Stock Info with TradingView</p><p></p><p>As the stock price is approaching $200, we can see that this price was previously a major level where the stock was bid, and this price also coincides very well with the 0.236 Fibonacci, at $201.61.</p><p>While the stock is definitely in a free fall at this point, we still like it long-term and would give CrowdStrike a buy rating at $200. Yes, this upcoming quarter may present some challenges for CrowdStrike. Still, simultaneously, the market could far overestimate the repercussions, meaning $200 could be a bargain for a growth stock such as CrowdStrike.</p><h2 id=\"id_1026916799\">Conclusion</h2><p>So, while CrowdStrike&#39;s recent IT mishap has thrown a wrench into their short-term plans, there’s still a lot to like about their long-term potential. The company faces some immediate hurdles, like potential lawsuits and a hit to their reputation, but they’ve also shown they can respond quickly and transparently.</p><p>Big players like Morgan Stanley (MS) and Jefferies still see them as a solid bet for the future, even if the next few months are rocky. If you’re thinking long-term, CrowdStrike’s strong fundamentals and market position might make it worth watching.</p><p>For those reasons, and the fact the stock has already sold off, we give CrowdStrike a buy rating at the current levels - particularly with $200 being an ideal price to add to your portfolio.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>CrowdStrike: Short-Term Headwinds Provide Long-Term Opportunity</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nCrowdStrike: Short-Term Headwinds Provide Long-Term Opportunity\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-08-08 11:41 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4710845-crowdstrike-short-term-headwinds-provide-long-term-opportunity><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>CrowdStrike is a leading cybersecurity firm whose valuation has come down tremendously after the worldwide IT outage.CrowdStrike caused widespread computer crashes with a faulty update, impacting ...</p>\n\n<a href=\"https://seekingalpha.com/article/4710845-crowdstrike-short-term-headwinds-provide-long-term-opportunity\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"IE000KEQY171.SGD":"PIMCO BALANCED INCOME AND GROWTH \"M\" (SGDHDG) INC","IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","LU1548497426.USD":"安联环球人工智能AT Acc","LU1951198990.SGD":"Natixis Thematics AI & Robotics Fund H-R/A SGD-H","BK4127":"投资银行业与经纪业","BK4585":"ETF&股票定投概念","IE00B3SWFQ91.USD":"PIMCO BALANCED INCOME AND GROWTH \"E\" (USD) INC","BK4534":"瑞士信贷持仓","LU1951200564.SGD":"Natixis Thematics AI & Robotics Fund R/A SGD","IE0034235303.USD":"PINEBRIDGE US RESEARCH ENHANCED CORE EQUITY \"A\" (USD) ACC","LU2125909593.SGD":"Natixis Thematics Meta R/A SGD","LU2286300806.USD":"Allianz Cyber Security AT Acc USD","IE00B7KXQ091.USD":"Janus Henderson Balanced A Inc USD","BK4587":"ChatGPT概念","BK4525":"远程办公概念","IE00BZ9MQY76.HKD":"FTGF CLEARBRIDGE US AGGRESSIVE GROWTH \"A\" (HKD) ACC","IE00BLSP4239.USD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis USD Plus","LU1923623000.USD":"Natixis Thematics AI & Robotics Fund R/A USD","LU1974910355.USD":"Allianz Thematica Cl AMg DIS USD","LU2125909247.SGD":"Natixis Thematics Meta H-R/A SGD","LU1923622614.USD":"Natixis Thematics Meta R/A USD","BK4521":"英国银行股","IE00B894F039.SGD":"Legg Mason ClearBridge - US Aggressive Growth A Acc SGD-H","BK4527":"明星科技股","IE00B19Z9505.USD":"美盛-美国大盘成长股A Acc","BK4588":"碎股","BK4503":"景林资产持仓","LU2125909759.SGD":"Natixis Thematics Safety H-R/A SGD","LU2125909916.SGD":"Natixis Thematics Safety R/A SGD","IE0003U64NQ7.SGD":"PIMCO BALANCED INCOME AND GROWTH \"M\" (SGDHDG) ACC","CRWD":"CrowdStrike Holdings, Inc.","LU1923622291.USD":"Natixis Thematics Safety R/A USD","IE00BBT3K403.USD":"LEGG MASON CLEARBRIDGE TACTICAL DIVIDEND INCOME \"A(USD) ACC","BK4504":"桥水持仓","BK4560":"网络安全概念","LU1169589451.USD":"ALLSPRING (LUX)  U.S. SELECT EQUITY \"A\" (USD) ACC","LU1992135472.HKD":"ALLIANZ GLOBAL INTELLIGENT CITIES \"AT\" (HKD) ACC","IE000W1ABFV2.USD":"PIMCO BALANCED INCOME AND GROWTH \"R\" (USD) INC","BK4548":"巴美列捷福持仓","LU0106831901.USD":"贝莱德世界金融基金A2","IE00B19Z9Z06.USD":"Legg Mason ClearBridge - US Aggressive Growth A Acc USD","LU2236285917.USD":"ALLIANZ GLOBAL INCOME \"AMG\" (USD) INC","BK4528":"SaaS概念","BK4532":"文艺复兴科技持仓"},"source_url":"https://seekingalpha.com/article/4710845-crowdstrike-short-term-headwinds-provide-long-term-opportunity","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2457522827","content_text":"CrowdStrike is a leading cybersecurity firm whose valuation has come down tremendously after the worldwide IT outage.CrowdStrike caused widespread computer crashes with a faulty update, impacting airports, train stations, and offices.The stock price of CrowdStrike plummeted nearly 15% following the outage, despite being up over 50% year-to-date.We believe that, even when taking all the potential legal repercussions into consideration, CrowdStrike stock is currently a buy.SC STUDIO/iStock via Getty ImagesIntroductionAs you may be aware, CrowdStrike (NASDAQ:CRWD) was the culprit that caused many Windows computers (MSFT) to crash when they pushed an update that contained a system-breaking bug. This meant computers used in airports, train stations, and offices could not work correctly.The monetary consequences of the outages are challenging to estimate, but multiple companies were unable to continue business for just about eight hours of the day. Looking at CrowdStrike's return since the beginning of the year, it is evident that the stock took an extreme hit following the outage. The stock was up more than 50% YTD, but is now down almost 15% in a matter of weeks.Seeking AlphaA drop such as what we have seen for CrowdStrike could present a very rare opportunity to add this stock to your portfolio at a relatively cheap price on a long-term basis.In our previous article on CrowdStrike, we argued that while the business is sound, the stock may have been a bit stretched at the time. Still, recent excellent quarterly earnings have only solidified CrowdStrike as a significant player in the cybersecurity industry.While the events in July were unfortunate and a major bump in the road for CrowdStrike, with chances it can affect business deals in the near term, the long-term growth story remains intact.The main question that needs answering is how big of a hit CrowdStrike will take from possible legal action following the bug, which we will discuss in this article. In addition, we will give a short review of how major financial institutions adjusted their price for CrowdStrike following the incident.But, before we start, let's take a look at the biggest IT security companies by market cap.Stock Info with Company FilingsAs you can see, Palo Alto (PANW) is now by far the biggest, followed by CrowdStrike (CRWD), Fortinet (FTNT), Cloudflare (NET), and Zscaler (ZS). These are all excellent companies, but CrowdStrike was one of the most loved cybersecurity stocks and had a very high valuation multiple associated with it.The recent outage changed this. Let's take a look and find out if CrowdStrike will be significantly impacted.Legal RepercussionsThe aforementioned incident led to approximately 8.5 million Windows devices globally crashing, resulting in significant operational disruptions across multiple sectors, including airlines, banks, healthcare facilities, and emergency services. The immediate financial impact is substantial, with damages potentially exceeding $1B and some estimates suggesting costs could reach as high as $5.4B for Fortune 500 companies alone.This could have far-reaching implications for CrowdStrike, as some analysts have noted that the expenses associated with remedying the situation and the potential loss of customer trust could negatively impact CrowdStrike's financials in the near term. These costs include not only direct remediation efforts but also potential credits, discounts, and free products offered to appease affected customers, which will likely affect the company's margins.The task for CrowdStrike right now is to review its service agreements with customers, as the incident falls under errors and omissions (E&O) liability. E&O insurance protects businesses from claims of negligence, malpractice, and service errors.However, many service agreements limit liability to amounts often lower than actual business interruption losses. This limitation could pose significant financial challenges for CrowdStrike as the actual monetary damages materialize for CrowdStrike. It is possible that insurance policies may cover business interruption or IT failure, but severe cases which the CrowdStrike incident might fall under can result in irreparable damage.CrowdStrike is facing a lawsuit from shareholders who accuse the company of fraudulently concealing its inadequate software testing, which led to the global outage on July 19 that crashed over eight million computers. Filed as a proposed class action in Austin, Texas, shareholders claim they were misled by CrowdStrike's assurances about its technology, which proved false when a flawed update caused widespread disruptions.In addition, CEO George Kurtz was summoned to testify before Congress, and Delta Air Lines has already hired lawyers to seek damages, citing a $500M loss. Litigation is likely, with negligence being a primary legal theory. It is also possible that the incident could result in a class action lawsuit, which raises questions about how CrowdStrike accessed kernel-level updates on Microsoft operating systems without Microsoft's control.Moving forward, there will likely be greater emphasis on cyber insurance policies to prevent such incidents. These policies are becoming more complex and tailored to cover various scenarios, including non-malicious system failures. The incident underscores the importance of robust cyber insurance as a safeguard against large-scale disruptions.Let’s summarize before moving on. The incident poses significant challenges for CrowdStrike, with short-term impacts on the company's reputation and financial health. Regulatory scrutiny, legal battles, and increased insurance complexities will be critical factors in how CrowdStrike navigates this crisis and recovers from its effects. The size of the damage is still somewhat unclear, but we do know that CrowdStrike will have to redeem itself.CrowdStrike Faces Short-Term Challenges, but Long-Term Growth Story Remains IntactFollowing the incident on July 19th, several major financial institutions were quick to re-rate CrowdStrike, mainly citing short-term headwinds. Let's go over the primary ones.After the outage, HSBC Global Research moved CrowdStrike from \"Buy\" to \"Hold\" and cut the price target from $388 to $302. HSBC may have cut the target price, but its analysts still see strong long-term potential. They are worried about near-term risks affecting results and guidance because of the outage, but overall, HSBC has lowered its revenue and earnings expectations for FY25 and FY26.Despite CrowdStrike's quick and transparent response, this incident has hurt its short-term reputation. Ongoing investigations might affect deals closing late in the quarter. Due to these uncertainties, analysts think CrowdStrike might give conservative guidance in its next earnings call.Morgan Stanley is still supportive of CrowdStrike's long-term potential but has taken the company off its \"Top Pick\" list because of the recent stock drop and near-term risks. However, they believe the stock is nearing its bottom and see the recent issues as a temporary setback. They expect CrowdStrike to lose about 20% of new bookings in the second half of 2024 but don’t think many existing customers will switch due to high switching costs. They’ve kept an \"Overweight\" rating with a $360 price target.Jefferies also cut its price target for CrowdStrike, highlighting concerns about a lawsuit involving Delta. However, analyst Joseph Gallo mentioned that while CrowdStrike might not need to reimburse customers for the outage, but the costs of litigation and the CEO's congressional testimony will weigh on the company. They’ve reduced their annual recurring revenue estimates by 1% for FY25 and FY26, lowering the price target from $400 to $300 but still maintaining a \"Buy\" rating.Gallo makes an interesting point that, given that the shares are down over 40% in the past month, CrowdStrike might issue preliminary results to reassure investors. He believes cautious FY25 guidance could help investors support the de-risked numbers.To sum it all up, CrowdStrike faces significant short-term challenges due to the IT outage and ongoing litigation, leading to downgrades, lower price targets, and financial uncertainties. However, their quick response and the high switching costs for existing customers could be their saving grace. Major financial institutions like Morgan Stanley and Jeffries still back CrowdStrike, focusing on its long-term growth potential. While the near future might be tough, CrowdStrike's strong market position and core strengths suggest that its long-term growth story is still solid. Investors should stay updated and keep a long-term view to navigate these challenges.CrowdStrike is still a great companyEven though CrowdStrike's stock has taken a hit recently, there's still much to be optimistic about when considering its long-term growth. Let's break it down in simple terms.First, their year-over-year revenue growth is at a hefty 34.26%. This is way better than the sector median of just 3.54%, showing they’re truly accelerating sales comparatively to their competitors. Looking ahead, they expect revenue to grow by 30.74%, which is still much higher than the average in their sector. Basically, they’re doing a great job and should keep pulling in good revenue.When it comes to running things efficiently, CrowdStrike is killing also in a league of its own. They’re looking at an EBITDA growth of 47.01%, compared to a sector median of just 6.31%. This shows they’re not just growing, but making money while doing it. Their EBIT growth is also strong at 49.31%, which again is much higher than the sector’s 6.79%, showing they’re also managing their costs really well.Seeking AlphaTheir EPS is yet another bright spot. CrowdStrike’s forward diluted EPS growth is expected to be 46.49%, much higher than the sector median. In addition, over the next three to five years, they expect an EPS growth rate of 37.24%, compared to the sector’s 14.49%. This is great to see if you want to add CrowdStrike to your long-term portfolio.Financially, they’re in a good spot, too. Their levered FCF margin is 34.21%, way higher than the sector median of 10.02%, highlighting their ability to generate cash from their operations, which they can reinvest or give back to shareholders at far better efficiency than the sector. Their cash from operations is a whopping $1.25B, compared to the sector median of $97.94M, showing they have a lot of money coming in to keep things running and fund future growth.Lastly, they have $15.22 cash per share, way above the sector median of $2.01. This gives them strong liquidity and financial flexibility.So, while CrowdStrike's stock has dipped recently, its strong revenue and earnings growth, solid cash flow, and efficient operations suggest that its long-term growth story is still very much alive. Investors should consider these strengths when considering the company’s future potential.If we take a short look at CrowdStrike’s chart on the 1-hour timeframe, we may be able to identify an interesting level where a buying opportunity could present itself. To keep it simple, we have identified some key support and resistance levels and coupled them with Fibonacci numbers from last year's lows to the most recent highs.Stock Info with TradingViewAs the stock price is approaching $200, we can see that this price was previously a major level where the stock was bid, and this price also coincides very well with the 0.236 Fibonacci, at $201.61.While the stock is definitely in a free fall at this point, we still like it long-term and would give CrowdStrike a buy rating at $200. Yes, this upcoming quarter may present some challenges for CrowdStrike. Still, simultaneously, the market could far overestimate the repercussions, meaning $200 could be a bargain for a growth stock such as CrowdStrike.ConclusionSo, while CrowdStrike's recent IT mishap has thrown a wrench into their short-term plans, there’s still a lot to like about their long-term potential. The company faces some immediate hurdles, like potential lawsuits and a hit to their reputation, but they’ve also shown they can respond quickly and transparently.Big players like Morgan Stanley (MS) and Jefferies still see them as a solid bet for the future, even if the next few months are rocky. If you’re thinking long-term, CrowdStrike’s strong fundamentals and market position might make it worth watching.For those reasons, and the fact the stock has already sold off, we give CrowdStrike a buy rating at the current levels - particularly with $200 being an ideal price to add to your portfolio.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":336102404116680,"gmtCreate":1723092340366,"gmtModify":1723098144526,"author":{"id":"4092023625449520","authorId":"4092023625449520","name":"alimoo9","avatar":"https://static.tigerbbs.com/3e678c3287e100f9e733d8ea1ef63402","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"4092023625449520","authorIdStr":"4092023625449520"},"htmlText":"I do not see anything good here, companies might find other alternatives, the reputational damage is too great to ignore.","listText":"I do not see anything good here, companies might find other alternatives, the reputational damage is too great to ignore.","text":"I do not see anything good here, companies might find other alternatives, the reputational damage is too great to ignore.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/336102404116680","repostId":2457522827,"repostType":2,"repost":{"id":"2457522827","pubTimestamp":1723088463,"share":"https://ttm.financial/m/news/2457522827?lang=&edition=fundamental","pubTime":"2024-08-08 11:41","market":"nz","language":"en","title":"CrowdStrike: Short-Term Headwinds Provide Long-Term Opportunity","url":"https://stock-news.laohu8.com/highlight/detail?id=2457522827","media":"seekingalpha","summary":"CrowdStrike is a leading cybersecurity firm whose valuation has come down tremendously after the worldwide IT outage.CrowdStrike caused widespread computer crashes with a faulty update, impacting airp","content":"<html><head></head><body><ul style=\"\"><li><p>CrowdStrike is a leading cybersecurity firm whose valuation has come down tremendously after the worldwide IT outage.</p></li><li><p>CrowdStrike caused widespread computer crashes with a faulty update, impacting airports, train stations, and offices.</p></li><li><p>The stock price of CrowdStrike plummeted nearly 15% following the outage, despite being up over 50% year-to-date.</p></li><li><p>We believe that, even when taking all the potential legal repercussions into consideration, CrowdStrike stock is currently a buy.</p></li></ul><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/a262bc808484054bdb2b450f59af010a\" tg-width=\"750\" tg-height=\"500\"/></p><p>SC STUDIO/iStock via Getty Images</p><p></p><h2 id=\"id_3716283991\">Introduction</h2><p>As you may be aware, CrowdStrike (NASDAQ:CRWD) was the culprit that caused many Windows computers (MSFT) to crash when they pushed an update that contained a system-breaking bug. This meant computers used in airports, train stations, and offices could not work correctly.</p><p>The monetary consequences of the outages are challenging to estimate, but multiple companies were unable to continue business for just about eight hours of the day. Looking at CrowdStrike&#39;s return since the beginning of the year, it is evident that the stock took an extreme hit following the outage. The stock was up more than 50% YTD, but is now down almost 15% in a matter of weeks.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/4a90ea90d9d8b5b8414e162b55313ff4\" tg-width=\"640\" tg-height=\"217\"/></p><p>Seeking Alpha</p><p></p><p>A drop such as what we have seen for CrowdStrike could present a very rare opportunity to add this stock to your portfolio at a relatively cheap price on a long-term basis.</p><p>In our previous article on CrowdStrike, we argued that while the business is sound, the stock may have been a bit stretched at the time. Still, recent excellent quarterly earnings have only solidified CrowdStrike as a significant player in the cybersecurity industry.</p><p>While the events in July were unfortunate and a major bump in the road for CrowdStrike, with chances it can affect business deals in the near term, the long-term growth story remains intact.</p><p>The main question that needs answering is how big of a hit CrowdStrike will take from possible legal action following the bug, which we will discuss in this article. In addition, we will give a short review of how major financial institutions adjusted their price for CrowdStrike following the incident.</p><p>But, before we start, let&#39;s take a look at the biggest IT security companies by market cap.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/586ed0e5afc65a56aca6d0a7fefa6e71\" tg-width=\"640\" tg-height=\"311\"/></p><p>Stock Info with Company Filings</p><p></p><p>As you can see, Palo Alto (PANW) is now by far the biggest, followed by CrowdStrike (CRWD), Fortinet (FTNT), Cloudflare (NET), and Zscaler (ZS). These are all excellent companies, but CrowdStrike was one of the most loved cybersecurity stocks and had a very high valuation multiple associated with it.</p><p>The recent outage changed this. Let&#39;s take a look and find out if CrowdStrike will be significantly impacted.</p><h2 id=\"id_3821153037\">Legal Repercussions</h2><p>The aforementioned incident led to approximately 8.5 million Windows devices globally crashing, resulting in significant operational disruptions across multiple sectors, including airlines, banks, healthcare facilities, and emergency services. The immediate financial impact is substantial, with damages potentially exceeding $1B and some estimates suggesting costs could reach as high as $5.4B for Fortune 500 companies alone.</p><p>This could have far-reaching implications for CrowdStrike, as some analysts have noted that the expenses associated with remedying the situation and the potential loss of customer trust could negatively impact CrowdStrike&#39;s financials in the near term. These costs include not only direct remediation efforts but also potential credits, discounts, and free products offered to appease affected customers, which will likely affect the company&#39;s margins.</p><p>The task for CrowdStrike right now is to review its service agreements with customers, as the incident falls under errors and omissions (E&amp;O) liability. E&amp;O insurance protects businesses from claims of negligence, malpractice, and service errors.</p><p>However, many service agreements limit liability to amounts often lower than actual business interruption losses. This limitation could pose significant financial challenges for CrowdStrike as the actual monetary damages materialize for CrowdStrike. It is possible that insurance policies may cover business interruption or IT failure, but severe cases which the CrowdStrike incident might fall under can result in irreparable damage.</p><p>CrowdStrike is facing a lawsuit from shareholders who accuse the company of fraudulently concealing its inadequate software testing, which led to the global outage on July 19 that crashed over eight million computers. Filed as a proposed class action in Austin, Texas, shareholders claim they were misled by CrowdStrike&#39;s assurances about its technology, which proved false when a flawed update caused widespread disruptions.</p><p>In addition, CEO George Kurtz was summoned to testify before Congress, and Delta Air Lines has already hired lawyers to seek damages, citing a $500M loss. Litigation is likely, with negligence being a primary legal theory. It is also possible that the incident could result in a class action lawsuit, which raises questions about how CrowdStrike accessed kernel-level updates on Microsoft operating systems without Microsoft&#39;s control.</p><p>Moving forward, there will likely be greater emphasis on cyber insurance policies to prevent such incidents. These policies are becoming more complex and tailored to cover various scenarios, including non-malicious system failures. The incident underscores the importance of robust cyber insurance as a safeguard against large-scale disruptions.</p><p>Let’s summarize before moving on. The incident poses significant challenges for CrowdStrike, with short-term impacts on the company&#39;s reputation and financial health. Regulatory scrutiny, legal battles, and increased insurance complexities will be critical factors in how CrowdStrike navigates this crisis and recovers from its effects. The size of the damage is still somewhat unclear, but we do know that CrowdStrike will have to redeem itself.</p><h2 id=\"id_1113889528\">CrowdStrike Faces Short-Term Challenges, but Long-Term Growth Story Remains Intact</h2><p>Following the incident on July 19th, several major financial institutions were quick to re-rate CrowdStrike, mainly citing short-term headwinds. Let&#39;s go over the primary ones.</p><p>After the outage, HSBC Global Research moved CrowdStrike from &#34;Buy&#34; to &#34;Hold&#34; and cut the price target from $388 to $302. HSBC may have cut the target price, but its analysts still see strong long-term potential. They are worried about near-term risks affecting results and guidance because of the outage, but overall, HSBC has lowered its revenue and earnings expectations for FY25 and FY26.</p><p>Despite CrowdStrike&#39;s quick and transparent response, this incident has hurt its short-term reputation. Ongoing investigations might affect deals closing late in the quarter. Due to these uncertainties, analysts think CrowdStrike might give conservative guidance in its next earnings call.</p><p>Morgan Stanley is still supportive of CrowdStrike&#39;s long-term potential but has taken the company off its &#34;Top Pick&#34; list because of the recent stock drop and near-term risks. However, they believe the stock is nearing its bottom and see the recent issues as a temporary setback. They expect CrowdStrike to lose about 20% of new bookings in the second half of 2024 but don’t think many existing customers will switch due to high switching costs. They’ve kept an &#34;Overweight&#34; rating with a $360 price target.</p><p>Jefferies also cut its price target for CrowdStrike, highlighting concerns about a lawsuit involving Delta. However, analyst Joseph Gallo mentioned that while CrowdStrike might not need to reimburse customers for the outage, but the costs of litigation and the CEO&#39;s congressional testimony will weigh on the company. They’ve reduced their annual recurring revenue estimates by 1% for FY25 and FY26, lowering the price target from $400 to $300 but still maintaining a &#34;Buy&#34; rating.</p><p>Gallo makes an interesting point that, given that the shares are down over 40% in the past month, CrowdStrike might issue preliminary results to reassure investors. He believes cautious FY25 guidance could help investors support the de-risked numbers.</p><p>To sum it all up, CrowdStrike faces significant short-term challenges due to the IT outage and ongoing litigation, leading to downgrades, lower price targets, and financial uncertainties. However, their quick response and the high switching costs for existing customers could be their saving grace. Major financial institutions like Morgan Stanley and Jeffries still back CrowdStrike, focusing on its long-term growth potential. While the near future might be tough, CrowdStrike&#39;s strong market position and core strengths suggest that its long-term growth story is still solid. Investors should stay updated and keep a long-term view to navigate these challenges.</p><h2 id=\"id_2673498749\">CrowdStrike is still a great company</h2><p>Even though CrowdStrike&#39;s stock has taken a hit recently, there&#39;s still much to be optimistic about when considering its long-term growth. Let&#39;s break it down in simple terms.</p><p>First, their year-over-year revenue growth is at a hefty 34.26%. This is way better than the sector median of just 3.54%, showing they’re truly accelerating sales comparatively to their competitors. Looking ahead, they expect revenue to grow by 30.74%, which is still much higher than the average in their sector. Basically, they’re doing a great job and should keep pulling in good revenue.</p><p>When it comes to running things efficiently, CrowdStrike is killing also in a league of its own. They’re looking at an EBITDA growth of 47.01%, compared to a sector median of just 6.31%. This shows they’re not just growing, but making money while doing it. Their EBIT growth is also strong at 49.31%, which again is much higher than the sector’s 6.79%, showing they’re also managing their costs really well.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/8e9732b069b510134901fdb28352d6b5\" tg-width=\"640\" tg-height=\"474\"/></p><p>Seeking Alpha</p><p></p><p>Their EPS is yet another bright spot. CrowdStrike’s forward diluted EPS growth is expected to be 46.49%, much higher than the sector median. In addition, over the next three to five years, they expect an EPS growth rate of 37.24%, compared to the sector’s 14.49%. This is great to see if you want to add CrowdStrike to your long-term portfolio.</p><p>Financially, they’re in a good spot, too. Their levered FCF margin is 34.21%, way higher than the sector median of 10.02%, highlighting their ability to generate cash from their operations, which they can reinvest or give back to shareholders at far better efficiency than the sector. Their cash from operations is a whopping $1.25B, compared to the sector median of $97.94M, showing they have a lot of money coming in to keep things running and fund future growth.</p><p>Lastly, they have $15.22 cash per share, way above the sector median of $2.01. This gives them strong liquidity and financial flexibility.</p><p>So, while CrowdStrike&#39;s stock has dipped recently, its strong revenue and earnings growth, solid cash flow, and efficient operations suggest that its long-term growth story is still very much alive. Investors should consider these strengths when considering the company’s future potential.</p><p>If we take a short look at CrowdStrike’s chart on the 1-hour timeframe, we may be able to identify an interesting level where a buying opportunity could present itself. To keep it simple, we have identified some key support and resistance levels and coupled them with Fibonacci numbers from last year&#39;s lows to the most recent highs.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/7903f61d6b700985fc85c91d90ea1cda\" tg-width=\"640\" tg-height=\"272\"/></p><p>Stock Info with TradingView</p><p></p><p>As the stock price is approaching $200, we can see that this price was previously a major level where the stock was bid, and this price also coincides very well with the 0.236 Fibonacci, at $201.61.</p><p>While the stock is definitely in a free fall at this point, we still like it long-term and would give CrowdStrike a buy rating at $200. Yes, this upcoming quarter may present some challenges for CrowdStrike. Still, simultaneously, the market could far overestimate the repercussions, meaning $200 could be a bargain for a growth stock such as CrowdStrike.</p><h2 id=\"id_1026916799\">Conclusion</h2><p>So, while CrowdStrike&#39;s recent IT mishap has thrown a wrench into their short-term plans, there’s still a lot to like about their long-term potential. The company faces some immediate hurdles, like potential lawsuits and a hit to their reputation, but they’ve also shown they can respond quickly and transparently.</p><p>Big players like Morgan Stanley (MS) and Jefferies still see them as a solid bet for the future, even if the next few months are rocky. If you’re thinking long-term, CrowdStrike’s strong fundamentals and market position might make it worth watching.</p><p>For those reasons, and the fact the stock has already sold off, we give CrowdStrike a buy rating at the current levels - particularly with $200 being an ideal price to add to your portfolio.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>CrowdStrike: Short-Term Headwinds Provide Long-Term Opportunity</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nCrowdStrike: Short-Term Headwinds Provide Long-Term Opportunity\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-08-08 11:41 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4710845-crowdstrike-short-term-headwinds-provide-long-term-opportunity><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>CrowdStrike is a leading cybersecurity firm whose valuation has come down tremendously after the worldwide IT outage.CrowdStrike caused widespread computer crashes with a faulty update, impacting ...</p>\n\n<a href=\"https://seekingalpha.com/article/4710845-crowdstrike-short-term-headwinds-provide-long-term-opportunity\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"IE000KEQY171.SGD":"PIMCO BALANCED INCOME AND GROWTH \"M\" (SGDHDG) INC","IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","LU1548497426.USD":"安联环球人工智能AT Acc","LU1951198990.SGD":"Natixis Thematics AI & Robotics Fund H-R/A SGD-H","BK4127":"投资银行业与经纪业","BK4585":"ETF&股票定投概念","IE00B3SWFQ91.USD":"PIMCO BALANCED INCOME AND GROWTH \"E\" (USD) INC","BK4534":"瑞士信贷持仓","LU1951200564.SGD":"Natixis Thematics AI & Robotics Fund R/A SGD","IE0034235303.USD":"PINEBRIDGE US RESEARCH ENHANCED CORE EQUITY \"A\" (USD) ACC","LU2125909593.SGD":"Natixis Thematics Meta R/A SGD","LU2286300806.USD":"Allianz Cyber Security AT Acc USD","IE00B7KXQ091.USD":"Janus Henderson Balanced A Inc USD","BK4587":"ChatGPT概念","BK4525":"远程办公概念","IE00BZ9MQY76.HKD":"FTGF CLEARBRIDGE US AGGRESSIVE GROWTH \"A\" (HKD) ACC","IE00BLSP4239.USD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis USD Plus","LU1923623000.USD":"Natixis Thematics AI & Robotics Fund R/A USD","LU1974910355.USD":"Allianz Thematica Cl AMg DIS USD","LU2125909247.SGD":"Natixis Thematics Meta H-R/A SGD","LU1923622614.USD":"Natixis Thematics Meta R/A USD","BK4521":"英国银行股","IE00B894F039.SGD":"Legg Mason ClearBridge - US Aggressive Growth A Acc SGD-H","BK4527":"明星科技股","IE00B19Z9505.USD":"美盛-美国大盘成长股A Acc","BK4588":"碎股","BK4503":"景林资产持仓","LU2125909759.SGD":"Natixis Thematics Safety H-R/A SGD","LU2125909916.SGD":"Natixis Thematics Safety R/A SGD","IE0003U64NQ7.SGD":"PIMCO BALANCED INCOME AND GROWTH \"M\" (SGDHDG) ACC","CRWD":"CrowdStrike Holdings, Inc.","LU1923622291.USD":"Natixis Thematics Safety R/A USD","IE00BBT3K403.USD":"LEGG MASON CLEARBRIDGE TACTICAL DIVIDEND INCOME \"A(USD) ACC","BK4504":"桥水持仓","BK4560":"网络安全概念","LU1169589451.USD":"ALLSPRING (LUX)  U.S. SELECT EQUITY \"A\" (USD) ACC","LU1992135472.HKD":"ALLIANZ GLOBAL INTELLIGENT CITIES \"AT\" (HKD) ACC","IE000W1ABFV2.USD":"PIMCO BALANCED INCOME AND GROWTH \"R\" (USD) INC","BK4548":"巴美列捷福持仓","LU0106831901.USD":"贝莱德世界金融基金A2","IE00B19Z9Z06.USD":"Legg Mason ClearBridge - US Aggressive Growth A Acc USD","LU2236285917.USD":"ALLIANZ GLOBAL INCOME \"AMG\" (USD) INC","BK4528":"SaaS概念","BK4532":"文艺复兴科技持仓"},"source_url":"https://seekingalpha.com/article/4710845-crowdstrike-short-term-headwinds-provide-long-term-opportunity","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2457522827","content_text":"CrowdStrike is a leading cybersecurity firm whose valuation has come down tremendously after the worldwide IT outage.CrowdStrike caused widespread computer crashes with a faulty update, impacting airports, train stations, and offices.The stock price of CrowdStrike plummeted nearly 15% following the outage, despite being up over 50% year-to-date.We believe that, even when taking all the potential legal repercussions into consideration, CrowdStrike stock is currently a buy.SC STUDIO/iStock via Getty ImagesIntroductionAs you may be aware, CrowdStrike (NASDAQ:CRWD) was the culprit that caused many Windows computers (MSFT) to crash when they pushed an update that contained a system-breaking bug. This meant computers used in airports, train stations, and offices could not work correctly.The monetary consequences of the outages are challenging to estimate, but multiple companies were unable to continue business for just about eight hours of the day. Looking at CrowdStrike's return since the beginning of the year, it is evident that the stock took an extreme hit following the outage. The stock was up more than 50% YTD, but is now down almost 15% in a matter of weeks.Seeking AlphaA drop such as what we have seen for CrowdStrike could present a very rare opportunity to add this stock to your portfolio at a relatively cheap price on a long-term basis.In our previous article on CrowdStrike, we argued that while the business is sound, the stock may have been a bit stretched at the time. Still, recent excellent quarterly earnings have only solidified CrowdStrike as a significant player in the cybersecurity industry.While the events in July were unfortunate and a major bump in the road for CrowdStrike, with chances it can affect business deals in the near term, the long-term growth story remains intact.The main question that needs answering is how big of a hit CrowdStrike will take from possible legal action following the bug, which we will discuss in this article. In addition, we will give a short review of how major financial institutions adjusted their price for CrowdStrike following the incident.But, before we start, let's take a look at the biggest IT security companies by market cap.Stock Info with Company FilingsAs you can see, Palo Alto (PANW) is now by far the biggest, followed by CrowdStrike (CRWD), Fortinet (FTNT), Cloudflare (NET), and Zscaler (ZS). These are all excellent companies, but CrowdStrike was one of the most loved cybersecurity stocks and had a very high valuation multiple associated with it.The recent outage changed this. Let's take a look and find out if CrowdStrike will be significantly impacted.Legal RepercussionsThe aforementioned incident led to approximately 8.5 million Windows devices globally crashing, resulting in significant operational disruptions across multiple sectors, including airlines, banks, healthcare facilities, and emergency services. The immediate financial impact is substantial, with damages potentially exceeding $1B and some estimates suggesting costs could reach as high as $5.4B for Fortune 500 companies alone.This could have far-reaching implications for CrowdStrike, as some analysts have noted that the expenses associated with remedying the situation and the potential loss of customer trust could negatively impact CrowdStrike's financials in the near term. These costs include not only direct remediation efforts but also potential credits, discounts, and free products offered to appease affected customers, which will likely affect the company's margins.The task for CrowdStrike right now is to review its service agreements with customers, as the incident falls under errors and omissions (E&O) liability. E&O insurance protects businesses from claims of negligence, malpractice, and service errors.However, many service agreements limit liability to amounts often lower than actual business interruption losses. This limitation could pose significant financial challenges for CrowdStrike as the actual monetary damages materialize for CrowdStrike. It is possible that insurance policies may cover business interruption or IT failure, but severe cases which the CrowdStrike incident might fall under can result in irreparable damage.CrowdStrike is facing a lawsuit from shareholders who accuse the company of fraudulently concealing its inadequate software testing, which led to the global outage on July 19 that crashed over eight million computers. Filed as a proposed class action in Austin, Texas, shareholders claim they were misled by CrowdStrike's assurances about its technology, which proved false when a flawed update caused widespread disruptions.In addition, CEO George Kurtz was summoned to testify before Congress, and Delta Air Lines has already hired lawyers to seek damages, citing a $500M loss. Litigation is likely, with negligence being a primary legal theory. It is also possible that the incident could result in a class action lawsuit, which raises questions about how CrowdStrike accessed kernel-level updates on Microsoft operating systems without Microsoft's control.Moving forward, there will likely be greater emphasis on cyber insurance policies to prevent such incidents. These policies are becoming more complex and tailored to cover various scenarios, including non-malicious system failures. The incident underscores the importance of robust cyber insurance as a safeguard against large-scale disruptions.Let’s summarize before moving on. The incident poses significant challenges for CrowdStrike, with short-term impacts on the company's reputation and financial health. Regulatory scrutiny, legal battles, and increased insurance complexities will be critical factors in how CrowdStrike navigates this crisis and recovers from its effects. The size of the damage is still somewhat unclear, but we do know that CrowdStrike will have to redeem itself.CrowdStrike Faces Short-Term Challenges, but Long-Term Growth Story Remains IntactFollowing the incident on July 19th, several major financial institutions were quick to re-rate CrowdStrike, mainly citing short-term headwinds. Let's go over the primary ones.After the outage, HSBC Global Research moved CrowdStrike from \"Buy\" to \"Hold\" and cut the price target from $388 to $302. HSBC may have cut the target price, but its analysts still see strong long-term potential. They are worried about near-term risks affecting results and guidance because of the outage, but overall, HSBC has lowered its revenue and earnings expectations for FY25 and FY26.Despite CrowdStrike's quick and transparent response, this incident has hurt its short-term reputation. Ongoing investigations might affect deals closing late in the quarter. Due to these uncertainties, analysts think CrowdStrike might give conservative guidance in its next earnings call.Morgan Stanley is still supportive of CrowdStrike's long-term potential but has taken the company off its \"Top Pick\" list because of the recent stock drop and near-term risks. However, they believe the stock is nearing its bottom and see the recent issues as a temporary setback. They expect CrowdStrike to lose about 20% of new bookings in the second half of 2024 but don’t think many existing customers will switch due to high switching costs. They’ve kept an \"Overweight\" rating with a $360 price target.Jefferies also cut its price target for CrowdStrike, highlighting concerns about a lawsuit involving Delta. However, analyst Joseph Gallo mentioned that while CrowdStrike might not need to reimburse customers for the outage, but the costs of litigation and the CEO's congressional testimony will weigh on the company. They’ve reduced their annual recurring revenue estimates by 1% for FY25 and FY26, lowering the price target from $400 to $300 but still maintaining a \"Buy\" rating.Gallo makes an interesting point that, given that the shares are down over 40% in the past month, CrowdStrike might issue preliminary results to reassure investors. He believes cautious FY25 guidance could help investors support the de-risked numbers.To sum it all up, CrowdStrike faces significant short-term challenges due to the IT outage and ongoing litigation, leading to downgrades, lower price targets, and financial uncertainties. However, their quick response and the high switching costs for existing customers could be their saving grace. Major financial institutions like Morgan Stanley and Jeffries still back CrowdStrike, focusing on its long-term growth potential. While the near future might be tough, CrowdStrike's strong market position and core strengths suggest that its long-term growth story is still solid. Investors should stay updated and keep a long-term view to navigate these challenges.CrowdStrike is still a great companyEven though CrowdStrike's stock has taken a hit recently, there's still much to be optimistic about when considering its long-term growth. Let's break it down in simple terms.First, their year-over-year revenue growth is at a hefty 34.26%. This is way better than the sector median of just 3.54%, showing they’re truly accelerating sales comparatively to their competitors. Looking ahead, they expect revenue to grow by 30.74%, which is still much higher than the average in their sector. Basically, they’re doing a great job and should keep pulling in good revenue.When it comes to running things efficiently, CrowdStrike is killing also in a league of its own. They’re looking at an EBITDA growth of 47.01%, compared to a sector median of just 6.31%. This shows they’re not just growing, but making money while doing it. Their EBIT growth is also strong at 49.31%, which again is much higher than the sector’s 6.79%, showing they’re also managing their costs really well.Seeking AlphaTheir EPS is yet another bright spot. CrowdStrike’s forward diluted EPS growth is expected to be 46.49%, much higher than the sector median. In addition, over the next three to five years, they expect an EPS growth rate of 37.24%, compared to the sector’s 14.49%. This is great to see if you want to add CrowdStrike to your long-term portfolio.Financially, they’re in a good spot, too. Their levered FCF margin is 34.21%, way higher than the sector median of 10.02%, highlighting their ability to generate cash from their operations, which they can reinvest or give back to shareholders at far better efficiency than the sector. Their cash from operations is a whopping $1.25B, compared to the sector median of $97.94M, showing they have a lot of money coming in to keep things running and fund future growth.Lastly, they have $15.22 cash per share, way above the sector median of $2.01. This gives them strong liquidity and financial flexibility.So, while CrowdStrike's stock has dipped recently, its strong revenue and earnings growth, solid cash flow, and efficient operations suggest that its long-term growth story is still very much alive. Investors should consider these strengths when considering the company’s future potential.If we take a short look at CrowdStrike’s chart on the 1-hour timeframe, we may be able to identify an interesting level where a buying opportunity could present itself. To keep it simple, we have identified some key support and resistance levels and coupled them with Fibonacci numbers from last year's lows to the most recent highs.Stock Info with TradingViewAs the stock price is approaching $200, we can see that this price was previously a major level where the stock was bid, and this price also coincides very well with the 0.236 Fibonacci, at $201.61.While the stock is definitely in a free fall at this point, we still like it long-term and would give CrowdStrike a buy rating at $200. Yes, this upcoming quarter may present some challenges for CrowdStrike. Still, simultaneously, the market could far overestimate the repercussions, meaning $200 could be a bargain for a growth stock such as CrowdStrike.ConclusionSo, while CrowdStrike's recent IT mishap has thrown a wrench into their short-term plans, there’s still a lot to like about their long-term potential. The company faces some immediate hurdles, like potential lawsuits and a hit to their reputation, but they’ve also shown they can respond quickly and transparently.Big players like Morgan Stanley (MS) and Jefferies still see them as a solid bet for the future, even if the next few months are rocky. If you’re thinking long-term, CrowdStrike’s strong fundamentals and market position might make it worth watching.For those reasons, and the fact the stock has already sold off, we give CrowdStrike a buy rating at the current levels - particularly with $200 being an ideal price to add to your portfolio.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":7,"commentSize":2,"repostSize":2,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false}}