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On Wednesday, Canaccord Genuity analysts downgraded CrowdStrike Holdings (NASDAQ: NASDAQ:CRWD) stock from a Buy to a Hold rating. This decision comes as the analysts raised the price target for the cybersecurity firm to $475 from the previous $420. The stock, currently trading at $488.76, has shown remarkable strength with a nearly 60% return over the past year, according to InvestingPro data.
The analysts noted that while they are encouraged by CrowdStrike’s expansion within its Flex (NASDAQ:FLEX) customer base, they see the risk/reward balance as more even at current levels. With shares trading near 21 times the company’s projected 2026 sales and 70 times its free cash flow, the analysts are cautious about further upside potential. InvestingPro analysis shows the company maintains strong financial health with a current ratio of 1.77 and operates with moderate debt levels.
CrowdStrike’s operations since an incident in July have been described as remarkable by the analysts, who also highlighted the company’s strong track record of execution and category leadership. Despite these positives, they believe that achieving further upside could be challenging given the expected ramp-up in net-new annual recurring revenue in the second half of the year and the anticipated acceleration in topline growth in 2026.
The firm continues to value CrowdStrike at a premium compared to its cybersecurity peers with similar growth rates, citing high visibility into annual recurring revenue growth as a key factor.
In other recent news, CrowdStrike Holdings Inc. announced its Q1 FY2026 earnings, surpassing market expectations with an earnings per share (EPS) of $0.73, exceeding the forecasted $0.66. The company reported revenue of $1.1 billion, which met projections and represented a 20% year-over-year increase. Additionally, CrowdStrike’s forward guidance indicates expected revenue growth for Q2 FY2026 between $1.144 billion and $1.152 billion. The company provided optimistic long-term projections, including a free cash flow margin exceeding 30% by FY2027. Notably, CrowdStrike continues to focus on AI innovations and product expansion, which has bolstered its competitive position in the market. In other developments, CrowdStrike has been involved in legal matters with ongoing DOJ/SEC investigations regarding revenue recognition. Despite these challenges, the company remains focused on growth, as demonstrated by its strategic realignment plan and authorization of up to $1 billion in share repurchases.
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