It was an insult-to-injury setup for cybersecurity firm CrowdStrike (CRWD), which is still stung by its recent massive security issue. But when the analysts started coming out and throwing in their appraisals of the company, which suddenly looked a lot bleaker, shares plunged. In fact, CrowdStrike shares lost another 13% in Monday afternoon’s trading.
First came word from Guggenheim analyst John DiFucci, who declared the whole mess an “…apparent quality control issue” and noted that this underscored previously seen “risk” in fourth-quarter estimates. And with CrowdStrike still trading high—though not as high as it was this time last week—that poses a risk to investors. DiFucci lowered his rating from Buy to Neutral but noted that this problem might turn itself around over the long term.
Meanwhile, BTIG analyst Gray Powell also lowered his rating on CrowdStrike from Buy to Neutral. Powell cited “more negative feedback than expected,” which was mostly due to that outage.
It’s worth noting that both analysts are rated five stars on TipRanks.
And It Might Not Be Over Yet
That hit was a disaster for CrowdStrike, and there are signs the hits may yet keep on coming. CrowdStrike reported that a “significant number” of devices are back online, which immediately implies that a whole lot of devices are still not, even several days later. Worse, CrowdStrike warned that hackers are passing around a malicious file in a bid to exploit the company’s problems.
With a range of industries impacted by the outage, it’s a safe bet that competitors will be able to swoop in and make some sales. Using the outage as a real-world example during a sales pitch is hard to pass up for companies looking to gain CRWD market share. Indeed, even long-time customers may be convinced to switch following this event.
Is CrowdStrike a Buy or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on CRWD stock based on 31 Buys, two Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 77.3% rally in its share price over the past year, the average CRWD price target of $395.45 per share implies 49.9% upside potential.
