CrowdStrike in focus as Stifel cuts price target ahead of earnings

CrowdStrike (NASDAQ:CRWD) was in focus on Friday as Stifel cut its price target on the cybersecurity company ahead of its fiscal second-quarter results, slated to be released on August 28.

Last month’s faulty update from CrowdStrike that caused the “blue screen of death” for Microsoft (MSFT) computers and a ripple in the global economy has left investors with a number of questions about the financial impact of the event. Stifel analyst Adam Borg said the update impacted the quarter and pipeline, but “several” partners said they still exceeded expectations, “whereas the majority met or missed expectations as deals were pushed, lost to competitors, and/or saw pricing concessions, etc.”

“While some customers/partners are frustrated, others acknowledged that an operational error like this can happen, and have appreciated CrowdStrike’s transparency and historical reputation,” Borg explained.

Borg kept his Buy rating on CrowdStrike but lowered his price target to $300 from $400.

Separately, Borg said that in conducting his checks, several of CrowdStrike’s competitors could be beneficiaries from the outage, including SentinelOne (S), Palo Alto Networks (PANW), Microsoft, and Sophos.

As for the legal liability issue, it’s hard to predict how it plays out, but it may take several years for the ultimate impact to be felt, Borg said.

“Like other company-specific black eyes (think Okta’s multiple breaches), we think the damage to CrowdStrike will ultimately not be as bad as feared and emotional reactions will fade over time, even while acknowledging the larger scope of the incident in this case,” Borg explained, adding that the company went into the event with a “stellar reputation” and it still has the best cybersecurity technology.

“To be clear, CrowdStrike will take its lumps in coming quarters with questions around churn/ up-sell risk, but we do think CrowdStrike ultimately recovers from this with minimal impact to its long-term growth opportunity,” Borg added.

A consensus of analysts expect CrowdStrike to earn $0.98 per share on $959.91M in revenue.