Rosenblatt analysts see the dip in CrowdStrike (NASDAQ:CRWD) stock as a strategic buying opportunity despite the global tech outage caused by a faulty software update.
CrowdStrike shares dropped by more than 14% in pre-market trading following the outage, a reaction Rosenblatt deems excessive given the nature of the issue.
The analysts emphasize that the outage was due to an isolated software glitch, not a systemic flaw in CrowdStrike's platform.
CEO George Kurtz quickly addressed the issue, confirming that it wasn't a security breach, and promptly deployed a fix. Rosenblatt feels this incident showcases the company's transparency and responsiveness in handling disruptions.
The firm notes that the outage's impact on critical services, including major airlines like Delta and United Airlines (NASDAQ:UAL), financial institutions, media companies, and 911 services, underscored CrowdStrike's role in global cybersecurity. This widespread reliance on CrowdStrike's solutions highlights their critical importance and demand.
According to Rosenblatt, this incident is unlikely to affect CrowdStrike's robust growth trajectory, driven by increasing cyber threats and its leading position in endpoint security.
Rosenblatt concludes that the market's reaction to the glitch offers investors a chance to acquire shares in a high-quality, growth-oriented cybersecurity firm at a discounted price. They feel that "the global tech outage caused by a faulty CrowdStrike software update, while disruptive, presents a compelling buying opportunity for CrowdStrike investors."
Meanwhile, analysts at RBC (TSX:RY) Capital told investors in a note that they believe in terms of customer confidence, management's commentary that this is not a security incident will be important. "That said, for a premium vendor in the space with a premium valuation, we're not surprised to see the negative stock reaction this morning," stated the bank.
"Historically, we'd note that we haven't seen a strong reaction to pipeline creation or overall demand following cyber incidents at other security firms," added RBC.
They explained that it currently appears to be an issue with process more than technology. Even so, RBC thinks this is a near- to medium-term negative for the company and will likely take time to resolve.
"At this point it doesn't change our long-term positive view of the company as we continue to see CRWD as a best-of-breed cyber-security platform," they concluded.