Jefferies analysts are gearing up for CrowdStrike Holdings Inc.'s (NASDAQ:CRWD) upcoming earnings report, which they anticipate will be a "clearing event" for the cybersecurity giant.
In a note to clients Thursday, the firm said that despite challenges stemming from the recent IT outage linked to a CrowdStrike update for Windows, Jefferies expects the company to report approximately 31% year-over-year ARR (Annual Recurring Revenue) growth.
However, the focus will likely be on CrowdStrike's FY25 guidance and its implications for future growth.
Jefferies predicts that CrowdStrike will guide FY25 ARR growth to around 24-25%, slightly below the consensus estimate of 25.4%.
The analysts note that while CrowdStrike typically offers "fearless guidance," there's a possibility the company could issue more conservative figures this time. This "kitchen sink" approach to guidance could help de-risk expectations and encourage investors to support the stock, even though the incident impacted only two weeks of F2Q.
In the near term, Jefferies warns that CrowdStrike shares might face pressure following the earnings report due to the premium valuation of 42x their CY25 FCF estimate.
However, they see this as a setup for a potentially positive catalyst at CrowdStrike's September Analyst Day, where management is expected to outline a revised long-term vision that could drive shares higher.
Jefferies recently adjusted their FY26 FCF estimates, lowering them by 3% to $1,439 million, which is 9% below the Street consensus.
Despite this, they believe CrowdStrike's valuation still warrants a premium compared to peers like Palo Alto Networks, due to its higher growth potential, even when factoring in the recent incident.
Jefferies remains a long-term fan of CrowdStrike, maintaining a Buy rating on the stock, but it acknowledges that the upcoming earnings report will be pivotal in determining the stock's trajectory.