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Stifel downgrades CrowdStrike, says tough macro backdrop is battering cybersecurity stock


It’s time to take a step back from CrowdStrike Holdings after the cybersecurity company’s latest earnings report, according to Stifel. Analyst Brad R. Reback downgraded the cybersecurity stock to hold from buy, saying that the company’s latest quarterly results showed CrowdStrike was hurt by a challenging macro backdrop. The analyst also cut his estimates and slashed his price target on the stock. CrowdStrike surpassed earnings and revenue expectations, posting adjusted earnings per share of 40 cents on $581 million in revenue. Analysts polled by Refinitiv were expecting adjusted earnings of 31 cents per share on $574 million in revenue. Still, the analyst said the top-line beat came in below historical trends, and noted that the cybersecurity provider reported its first miss on annual recurring revenues. Shares of CrowdStrike are down roughly 19% in Wednesday premarket trading. “While management previously warned investors that the strong Q/Q [net new annual recurring revenue] seasonality in 2H would be less pronounced, the magnitude of the 3Q ARR miss and management’s forward looking commentary (weakness persisting into Q4, no Q4 budget flush, 10% sequential decline in NNARR), was clearly much worse than anticipated,” Reback wrote in a Tuesday note. While the stock is already down more than 32% this year, the analyst expects further downside ahead after the company issued light guidance. The analyst’s $120 price target, slashed from $225, is about 13% below where shares closed Tuesday. “Although management’s preliminary CY24 outlook was below consensus, we believe it could take a few quarters until expectations are fully de-risked,” Reback added. –CNBC’s Michael Bloom contributed to this report.

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