Investor
confidence
in
CrowdStrike
Holdings
(CRWD) has
plummeted
following
the
global
IT
outage
caused
by
a
faulty
content
update.
The
firm’s
shares
are
down
more
than
20%
since
the
incident
in
the
early
hours
of
July
19.
After
doing
a
more
extensive
review,
following
our
initial
reaction
Friday
morning,
we
are
maintaining
our
$300
(£232.72)
Fair
Value
Estimate
and
Narrow
Economic
Moat
rating
for
the
company.
We
continue
to
view
CrowdStrike
as
a
high-quality
security
vendor
with
an
exceptional
track
record
of
profitable
growth
that
we
see
continuing.
While
we
viewed
CrowdStrike’s
shares
as
overvalued
before
the
chaos,
we
are
not
as
pessimistic
as
the
market
about
the
outage’s
impact
on
the
firm’s
business.
We
now
view
shares
as
marginally
undervalued,
but
still
trading
in
3-star
territory.
CrowdStrike’s
robust
platform,
strong
relationships
with
end
customers
and
value-added
resellers,
and
its
expansive
platform
that
stands
to
benefit
from
vendor
consolidation
within
security,
all
underscore
our
confidence
in
the
firm’s
long-term
potential.
While
we
maintain
our
confidence
in
the
firm’s
long-term
opportunity,
we
think
there
will
be
short-term
costs.
We
believe
CrowdStrike’s
management
and
sales
teams
will
have
to
work
extensively
at
assuaging
customer
concerns.
We
foresee
the
company
needing
to
offer
discounts
and
credits
to
existing
customers
to
entice
them
to
stay.
While
this
creates
near-term
headwinds,
our
base
case
doesn’t
include
a
doomsday
scenario
with
substantial
customer
churn
and
materially
lower
medium-to-long-term
top-line
expansion.
Key
Morningstar
Metrics
for
CrowdStrike
Holdings
Fair
Value
Estimate:
$300.00
Morningstar
Rating: ★★★
Morningstar
Economic
Moat
Rating:
Narrow
Morningstar
Uncertainty
Rating:
High
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