JMP Securities on CrowdStrike Holdings (CRWD): 'Investors Should Buy CRWD Here'
JMP Securities analyst Trevor Walsh reiterated a Market Outperform rating and $400.00 price target on CrowdStrike Holdings (NASDAQ: CRWD)
The analyst comments "Ahead of C2Q24 earnings, we discuss our thoughts on the CrowdStrike global IT outage (and our view on the opportunity this has created), Google’s failed bid for Wiz, and Gartner’s new Single-Vendor SASE Magic Quadrant. We also share our mix of recent data points for the sector, including a total of 40 specific to the topic of the CrowdStrike IT outage. The median cybersecurity company in our coverage universe is trading at 12.1x CY2024E revenue — up from 11.3x CY2024E revenue when we wrote our last earnings preview note on 5/14/2024. Given the dynamics noted above, some names we point investors to are: 1) CrowdStrike: as of the final post-incident report, 99% of Windows sensors are online as of July 29th, with internal preventative/remediation actions including: a) enhanced software testing procedures with additional validation checks; b) improved error handling mechanism in the Falcon sensor; and c) adoption of new staggered (canary) deployment procedures (see our Current State of Affairs section). Based on our litany of data points (see our Post-Incident related data points), we also heard the following overarching themes: a) a portion of the blame arguably lies with the operating system (i.e., Microsoft [MSFT, NC]) itself; b) customers with strong enterprise resilience (backup/recovery frameworks) and change management controls experienced minimal, if any, business disruption; and 3) this type of error is prone to and has occurred among other major enterprise software vendors, all of which we feel makes proving the legal case for gross negligence on the part of CrowdStrike a difficult proposition. Furthermore, we assume CrowdStrike’s legal team will look to swiftly resolve any potential legal matters with customers before they even reach public proceedings. Finally, despite initial reputational damage and a weakening of trust surrounding the outage, we do not observe widespread account churn for CrowdStrike nor anticipate this in the future, and as such, expect the overall business to remain generally in line with its current trajectory. Net-net, our views ultimately suggest an attractive, historic low entry point given the current stock pullback; and 2) CyberArk: with a series of data points suggesting broad-based strength across identity and machine identity offerings and supported by our positive outlook for the Venafi acquisition, we feel the stock’s current momentum is justified and the stock currently represents the best YTD performance across our coverage (up 17% YTD)."
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Shares of CrowdStrike Holdings closed at $231.96 yesterday.