Report resurrecting CrowdStrike’s Carahsoft issues, says Citi

Citi notes CrowdStrike (CRWD) shares are negatively reacting to Bloomberg’s report on the DOJ and SEC both investigating the company’s previously-signed deal with Carahsoft. While “the optics are tough,” during the firm’s pre-quiet-period catchup, it learned that revenue recognition treatment was in full compliance with GAAP accounting standards and what was explained as a “transferability” clause in the deal terms support the transaction’s accounting treatment, says the analyst. The firm, which also notes that CrowdStrike assumed this $32M contract will not renew, says net-new risk could be a revenue-hit pending the investigation outcome. The firm has a Buy rating and $420 price target on CrowdStrike shares, which are down about 3% to $424.20 in late morning trading.