CrowdStrike lifted to buy as bad news is 'largely behind us' - HSBC

HSBC upgraded CrowdStrike Holdings Inc. (NASDAQ:CRWD ) to Buy from Hold in a note Friday, citing that the worst of the company's challenges are now behind it.

Analysts raised their target price for the stock to $339 from $302, highlighting the cybersecurity firm's strong performance in its second quarter of fiscal year 2025 (2QFY25) and its resilient long-term growth prospects.

CrowdStrike reported a 32% year-over-year increase in revenue for 2QFY25, slightly ahead of market expectations.

Despite an IT outage in July that delayed some deals, the company managed to beat consensus estimates for non-GAAP operating profit, with a 41% year-over-year jump in non-GAAP earnings per share (EPS).

The company did lower its full-year guidance, acknowledging the ongoing impact of the July incident, but still expects robust revenue growth of 23% year-over-year in the second half of FY25.

"The company's long-term growth prospects remain intact, in our view," said HSBC. "The company has exposure to some of the fastest-growing
markets in the security industry."

The firm's native AI design is seen as a structural advantage, setting it apart from competitors and positioning it well for AI-driven growth.

Analysts also pointed out that, despite recent challenges, the company's net new annual recurring revenue (ARR) continues to grow, particularly in its hypergrowth business segments.

HSBC's revised price target implies a 28.3% upside, reinforcing its confidence in CrowdStrike's ability to capitalize on future growth opportunities. "With the financial impact of the July incident now known, we think that the bad news is behind us," stated the bank.

Source: Investing.com