CrowdStrike likely remains with Microsoft, no serious churn seen: TD Cowen

CrowdStrike (NASDAQ:CRWD) appears to be rebounding from July’s widespread outage as analysts do not see significant churn and Microsoft (NASDAQ:MSFT) is not expected to cut ties with the cybersecurity firm, according to TD Cowen.

However, the investment firm noted CrowdStrike needs two more quarters of results to better quantify the Falcon Flex renewal pipeline.

“We reiterate our view … that MSFT is unlikely to cut CRWD off from accessing telemetry data out of the kernel given the mission criticality of the Falcon EDR platform product (deployed at >29k customers, 70% of Fortune 100),” said TD Cowen analysts, led by Shaul Eyal, in a Friday note.

The firm also said it is not seeing significant near-term churn, as it doesn’t yet appear that customers are jumping ship following the July outage.

“We understand that a more precise quantification of the revenue uplift potential requires two more quarters of patience before management obtains sufficient visibility into that pipeline,” Eyal added.

TD Cowen retains its Buy rating on the stock and a $380 price target.

Prior to the outage, CrowdStrike shares flirted around $390, which was an all-time high for the stock, during June and early July. It plunged to a low of just below $218 by Aug. 2 following the outage, but has already rebounded above $280.

“CrowdStrike’s stock could continue to appreciate as the company improves profitability and benefits from a high multiple because of its dominant positioning and long runway for growth,” said Seeking Alpha analyst Victor Dergunov.

CrowdStrike has a Buy rating from both Seeking Alpha and Wall Street analysts. It has a Hold rating from Seeking Alpha’s Quant system, which routinely beats the market.