Morgan Stanley analyst Hamza Fodderwala believes that CrowdStrike Holdings (CRWD) will recover from last week’s major outage thanks to the company’s quick response. Many Microsoft (MSFT) Windows users worldwide saw the Blue Screen of Death (BSOD)—a serious error screen that shows up when a computer crashes, causing unexpected shutdowns or restarts.
This widespread outage caused flight delays and disrupted banking services and supermarkets. It seemed to be linked to a technical issue with CrowdStrike Falcon, a key product that provides endpoint protection for Windows systems.
Morgan Stanley Analyst’s “Buy” Rationale for CRWD
Meanwhile, analyst Hamza Fodderwala believes that CRWD will be able to “limit long-term reputational damage post the outage given the company’s swift response (>97% of impacted Windows sensors back online as of 7/25) and partner checks indicating limited churn risk so far.”
However, the analyst removed CRWD from its “Top Pick” list due to the stock’s decline of more than 30% over the past month. Fodderwala believes that CRWD is nearing a bottom and views the recent events as a potential headwind.
Furthermore, the analyst pointed out that the company is likely to lose around 20% of new bookings over the second half of 2024 due to the outage. However, Fodderwala believes that switching cybersecurity providers is costly for existing customers of CRWD and new customers may take longer to consider alternatives like SentinelOne (S) and Microsoft (MSFT).
As a result, the analyst lowered the price target to $360 from $396, implying an upside potential of around 38% from current levels, while maintaining a Buy rating on the stock.
Is CrowdStrike a Buy or Sell?
Analysts remain bullish about CRWD stock, with a Strong Buy consensus rating based on 28 Buys, seven Holds, and one Sell. Over the past year, CRWD has surged by more than 60%, and the average CRWD price target of $368.26 implies an upside potential of 40.6% from current levels.
