Cybersecurity firm CrowdStrike Holdings (CRWD) is set to release its fiscal Q2 2025 financials on August 28. The company has significantly benefited from AI trends, with analysts predicting earnings of $0.97 per share and revenues of $958.3 million. These figures represent year-over-year increases of 31% and 30%, respectively, according to TipRanks.
As we approach Q2, it’s crucial to note that CrowdStrike stock has faced significant declines recently. A global IT outage in July, triggered by a faulty update from CrowdStrike, led to a drop in its share price. This incident had widespread repercussions, impacting banks, airlines, and emergency services worldwide. In the past three months, the stock has fallen by 23.3%.
While analysts forecast growth in both revenue and earnings for Q2, the financial and reputational fallout from the outage remains unclear. This uncertainty raises concerns about its potential impact on CRWD’s upcoming results.
Analysts’ Mixed Sentiment on CrowdStrike Amidst Recent Outage
According to TipRanks’ Bulls Say, Bears Say tool, bears contend that CrowdStrike’s recent outage revealed Quality Assurance issues, potentially causing customers to delay purchases. They also believe the outage stalled many deals, creating a moderate headwind to Q2 FY25 ARR (Annual Recurring Revenue). Additionally, they expect management to reduce Q3 ARR projections to about $200 million.
Nevertheless, bulls view the current stock pressure as a compelling buying opportunity. They highlighted that in a Zero-Trust environment, the importance of endpoint security is growing, and CrowdStrike is well-positioned to be a key player in the cyber platform market.
What Do Options Traders Anticipate?
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you.
Indeed, it currently says that options traders are expecting a 9.93% move in either direction.
Is CrowdStrike a Buy or Sell?
Ahead of Q2, most Wall Street analysts have maintained their Buy ratings on the stock over the past week, with the exception of Deutsche Bank’s Brad Zelnick, who is among the top 1% of Wall Street experts and has maintained a Hold rating on CRWD.
Based on analysts’ consensus ratings, CrowdStrike stock is a buy ahead of Q2 earnings. It sports a Strong Buy consensus rating, reflecting 30 Buy, six Hold, and one Sell recommendations. At an average price target of $339.65, the average CRWD stock price target implies 27.75% upside potential.
