.July 22, 2024 10:49:00 AM

Guggenheim analysts downgraded CrowdStrike (NASDAQ:CRWD) to Neutral from Buy due to concerns about securing new deals following a recent quality assurance issue. The stock dropped 11% on Friday and is down over 5% in pre-market trading. The firm highlighted risks in fourth-quarter consensus estimates, especially in annual recurring revenue. CrowdStrike’s stock trades at the highest multiple of recurring revenue within Guggenheim’s software coverage, prompting the downgrade.

Despite expanding its technology portfolio to 28 modules and aggressively pursuing new markets, CrowdStrike faces challenges after global IT disruptions. The company’s industry-leading gross retention rates and growth may be impacted as its reputation takes time to recover. Analysts anticipate a temporary negative impact on business operations and new business signings in the near term.