Why CrowdStrike Stock Soared Today

Actions of CrowdStrike (CRWD 6.62%) moved higher today after the company received an upbeat rating from analyst City Group. The analyst relied on earlier comments from Wall Street that the company appeared to have escaped the worst of the backlash that followed the incident in July, when a faulty software update halted flights and banking operations and disrupted other industries.

As of 11:11 a.m. ET, CrowdStrike shares were up 4.5% on the news.

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Wall Street thinks the worst is behind CrowdStrike

This morning, Citi was the latest Wall Street firm to issue a bullish rating on the stock following the Fal.Con conference earlier this week. Citi praised management’s transparency about the previous software update debacle and cited evidence of customer resilience, noting that the churn rate is lower than expected and the cybersecurity company has done a good job of maintaining its prices.

Citi reiterated a buy rating on CrowdStrike with a $300 price target. While that only implies a 4% increase in the stock, the note is clearly positive as CrowdStrike is still trading below where it was before the incident.

Earlier in the week, a number of other research firms, including DA Davidson, Evercore ISI, Jefferiesand Truist all reiterated buy ratings on the stock and said customer backlash following the software incident had largely passed.

Can CrowdStrike keep winning?

It’s certainly a good sign that CrowdStrike survived the worst of the incident, but the stock is still expensive and growth slowed before the outage.

If the company is truly back on track, the stock should move higher, but investors should be wary of the valuation as the price-to-sales ratio was 20. Expect the stock’s volatility to continue.