On Wednesday, Citi maintained a Buy rating on CrowdStrike Holdings (NASDAQ:CRWD) and raised the price target to $400 from the previous $300. The firm highlighted the company's impressive revenue milestone, surpassing $1 billion, which represents a 29% year-over-year increase and exceeded expectations by 3 percentage points. This achievement came alongside a healthy operating margin of 19%, which was 2 percentage points ahead of forecasts, despite costs related to a recent outage.
The analyst noted that CrowdStrike's net new annual recurring revenue (NNARR) of $153 million was a 31% decrease year-over-year. Although it surpassed consensus estimates, it fell short of some buy-side expectations, particularly in light of non-renewals with Carahsoft and the IRS, combined with impacts from Chinese cyber competition (CCP). These figures were gathered from discussions with investors.
The July outage affected the near-term business momentum, leading to extended sales cycles, a higher rate of installed-base contraction, muted upsell opportunities, and delayed outbound sales activities.
These factors are expected to influence the fourth fiscal quarter, which is typically renewal-centric, with indications of NNARR and free cash flow margin (FCFM) falling below street estimates. Consequently, CrowdStrike's stock is anticipated to consolidate at a lower level, especially considering its significant year-to-date recovery in stock valuation.
Citi's outlook remains positive, expecting some debate around gross retention rate (GRR), net retention rate (NRR), and FCFM as they reach near-term floors. However, the firm anticipates that offerings like FalconFlex and CrowdStrike Falcon Spotlight (CFS) will have a positive strategic impact on retention, expansion, competitive positioning, average selling price, and market consolidation. This is supported by the acceleration of remaining performance obligations (RPO) bookings, which have grown approximately 70% year-over-year.
Finally, Citi has increased its short-term forecasts for the company's top line and EBIT, while expressing higher conviction in out-year forecasts and trajectory, aligning with pre-outage growth tracks. This revised outlook has led to the application of higher terminal multiples, resulting in the new $400 price target.
In other recent news, CrowdStrike Holdings has been making significant strides in the cybersecurity market. The company's third-quarter results exceeded expectations, with a 29% increase in revenue from the previous year, surpassing the $1 billion mark. The Annual Recurring Revenue (ARR) also saw a significant rise, reaching $4.02 billion, marking a 27% growth from the previous year.
Baird and Susquehanna, two analyst firms, have raised their price targets for CrowdStrike, maintaining their Outperform and Positive ratings respectively. Baird's target increased to $390, while Susquehanna's rose to $400. Scotiabank (TSX:BNS) and BTIG, however, maintained their cautious stances, keeping their Sector Perform and Neutral ratings respectively.
Despite facing challenges such as a service disruption in July and customer churn concerns, CrowdStrike's broader platform adoption, driven by the Falcon Flex (NASDAQ:FLEX) offering, is expected to contribute to the company's sustained success. The company's management aims to accelerate net new ARR in the second half of fiscal year 2026 and has set a goal to reach $10 billion in ARR by fiscal year 2031.
InvestingPro Insights
CrowdStrike's recent performance and Citi's bullish outlook are further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $89.3 billion, reflecting investor confidence in its growth trajectory. This aligns with Citi's raised price target and positive assessment of CrowdStrike's future prospects.
InvestingPro data shows that CrowdStrike's revenue for the last twelve months as of Q2 2025 reached $3.52 billion, with a robust revenue growth of 33.07%. This strong revenue performance corroborates Citi's observation of the company surpassing the $1 billion quarterly revenue milestone.
Two key InvestingPro Tips are particularly relevant to the article's context:
1. "Net income is expected to grow this year," which supports Citi's optimistic outlook and increased forecasts for CrowdStrike's top line and EBIT.
2. "Profitable over the last twelve months," indicating that CrowdStrike has successfully translated its revenue growth into profitability, a crucial factor for long-term investor confidence.
These insights are just a sample of the valuable information available through InvestingPro. The platform offers 13 additional tips for CrowdStrike, providing a comprehensive view of the company's financial health and market position.
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