The Zacks Analyst Blog CrowdStrike, Palo Alto Networks and CyberArk

Core Viewpoint - CrowdStrike Holdings, Inc. has experienced a significant decline in stock price, raising concerns among investors about whether to sell or buy more shares due to ongoing legal investigations and disappointing profit guidance [2][14][16]. Group 1: Stock Performance - CrowdStrike's stock has dropped 6% in the past month and is down 19% from its 52-week high of $455.59 reached on February 19 [2][3]. - The year-to-date performance has decreased from a gain of 31.6$32 million deal with Carahsoft Technology, which was intended to provide cybersecurity tools to the IRS [4][5]. - Allegations include potential "pre-booking" or channel stuffing, which could inflate financial results [5][6]. - The legal scrutiny raises significant concerns about CrowdStrike's credibility and could lead to fines or reputational damage if misconduct is found [6][15]. Group 3: Market Conditions - Broader market sell-offs and macroeconomic headwinds, including a tariff war and fears of a global economic slowdown, are contributing to CrowdStrike's stock decline [7][8]. - High interest rates are making high-valuation stocks like CrowdStrike more vulnerable to market corrections [8]. Group 4: Profit Guidance - CrowdStrike issued disappointing profit guidance for fiscal 2026, projecting adjusted EPS of $3.33-$3.45, below the Zacks Consensus Estimate of $4.36 [10][11]. - The company anticipates fiscal first-quarter adjusted EPS of 64-66 cents, significantly lower than the consensus estimate of 94 cents [10][11]. Group 5: Valuation Concerns - Despite recent declines, CrowdStrike continues to trade at a high forward price-to-sales (P/S) ratio of 18.63, compared to the industry average of 13.22 [12]. - The stock's premium valuation leaves little room for error, increasing downside risk if growth expectations are not met or if negative developments arise from the ongoing investigations [13][16].