Key Takeaways
- CrowdStrike stock rose Tuesday, as Piper Sandler analysts upgraded their rating on the stock and outlined their vision for how the company can recover from last month’s massive tech outage.
- The analysts said they believe financial impacts of the outage will be minimal, with the likely outcome that CrowdStrike loses a small number of customers and offers discounted services to retain some others.
- The analysts said any impact the outage will have on CrowdStrike’s earnings is priced into the stock after its 40% slide over the last several weeks.
CrowdStrike (CRWD) stock may have entered recovery mode after a recent slide that followed a massive Microsoft (MSFT) outage caused by a CrowdStrike software update, with one group of analysts starting to voice optimism about the stock.
Piper Sandler analysts wrote Tuesday that any impact the outage will have on CrowdStrike’s upcoming earnings reports is likely to be minimal, and is largely priced into the stock’s current price after sinking roughly 40% over the last three weeks. The analysts upgraded CrowdStrike stock to “overweight” from “neutral”, while lowering their price target to $290 from $310 as they adjusted some financial projections for the cybersecurity company.
CrowdStrike shares were up 3.5% at $229.73 in recent trading Tuesday, building on the previous session’s 1.9% gain following weeks of losses.
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Financial Implications of Outage Likely to Be Short-Lived, Manageable
Despite the likelihood that headlines about the outage will remain negative in the near term with focus on potential Congressional testimony and lawsuits, the analysts said they believe “the ramifications of the event will likely be more-so short-lived and at negligible cost.”
Piper Sandler analysts said it’s possible that CrowdStrike loses some current or potential customers because of the outage, but noted that the company’s differentiated portfolio makes it a difficult company to totally separate from. The company could offer discounts or additional services to retain some customers, leading the analysts to believe the outage won’t have a substantial impact on CrowdStrike’s earnings.
CrowdStrike is already facing one class action lawsuit in Texas from shareholders claiming to be harmed by the outage’s impact on the stock, while Delta Air Lines (DAL) has made public claims that the company is likely to seek damages over the outage, as the company was the hardest hit of major airlines. CrowdStrike has responded by saying it is not responsible for how Delta handled the outage, and said the airline ignored its offers for assistance in getting back to normal operations.