Should you sell your Crowdstrike stock?

Roth Capital Markets analyst Taz Koujalgi reiterated a “Buy” rating and US $510.00 price target on CrowdStrike Holdings (CrowdStrike Holdings Stock Quote, Chart, News, Analysts, Financials NASDAQ:CRWD) in a Dec. 2 earnings preview, saying buyside expectations for third-quarter net new ARR appear achievable, though there is “slight risk” to the company’s fourth-quarter revenue guide.

Koujalgi said investors are generally expecting US$258-260-million in “organic” NNARR for Q3, versus CrowdStrike’s guidance for high-single-digit sequential growth, which implies roughly US$239-million. That expectation represents an ~18% q/q uptick, above typical Q3 seasonality, but investors are modelling a modest lift from CCP conversions moving to paid offerings.

“These expectations imply a ~$20M beat, slightly higher than last quarter, but they still appear doable,” he said. He added that the buyside is also assuming US$5-10-million in NNARR contribution from Onum.

CrowdStrike, based in Austin, provides cloud-native cybersecurity services globally.

Koujalgi said his channel checks were solid and consistent with feedback at the end of the prior quarter. While several vendors offered aggressive discounting in October, “CRWD was the least aggressive” and did not use calendar-based promotions. Sentiment around next-gen SIEM, Falcon Privileged Access, and partnerships with Okta and Zscaler was positive. Concerns about the October U.S. federal shutdown have eased, with Palo Alto Networks and Zscaler both reporting no impact.

For revenue, buyside expectations cluster around US$1.23-1.233-billion for Q3, with a few outliers slightly above US$1.235-billion. Views on Q4 guidance are split: some expect a roughly in-line revenue guide near US$1.294-billion, while others expect management to guide below the Street. Investors generally expect NNARR guidance to come in slightly ahead of current consensus (~US$289-290-million).

Koujalgi said Q3 NNARR around US$260-million appears reasonable based on typical beat patterns. CrowdStrike delivered US$19-million and US$16-million NNARR beats in the prior two quarters. Using a revenue-conversion method tied to subscription growth, he arrives at a similar figure, implying total revenue of roughly US$1.233-billion.

Looking to Q4, NNARR has historically grown 25%–26% q/q. With a potential CCP tailwind, he models ~27%, or about US$360-million, versus Street expectations near US$290-million. Applying the revenue-conversion framework yields total revenue of US$1.309-billion, modestly above consensus, which “presents a slight risk” to the top-line guide.

Koujalgi values the shares using EV/FCF, citing CrowdStrike’s combination of growth and expanding margins, with free cash flow margins approaching 30 per cent. His US$510 target is based on 55× CY26/FY27 EV/FCF, equating to ~2.4× FY28 EV/FCF/growth, a modest premium to peers that he argues is justified despite “depressed near-term momentum” following the recent outage.

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