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Why CrowdStrike Stock Slipped 14.4% in October

By Keith Noonan – Nov 11, 2019 at 7:52AM

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The cloud-based endpoint security stock has lost half its value over the last three months, but it's still up roughly 38% from its June IPO price.

What happened

Shares of CrowdStrike (CRWD 0.96%) slumped 14.4% in October, according to data from S&P Global Market Intelligence. The cloud cybersecurity company's stock posted significant sell-offs following a couple of analyst downgrades and a broader pullback for cloud-software stocks.

CRWD Chart

CRWD data by YCharts.

Goldman Sachs analyst Heather Bellini cut her rating on CrowdStrike from neutral to sell in a note published on Oct. 11 and lowered her price target on the stock from $83 to $66. This was followed by Citigroup analyst Walter Pritchard initiating coverage and giving the stock a sell rating on Oct. 14. 

A lock icon.

Image source: Getty Images.

So what

The note from Citi put a $43 price target on the stock, representing about 28.6% downside from the stock's closing price of $60.27 at the end of the previous week's trading on Oct. 11. Pritchard noted in his coverage that he saw CrowdStrike as having limited room for growth in the highly fragmented endpoint security market. 

Now what

CrowdStrike is scheduled to report third-quarter earnings after the market closes on Dec. 5. It's guiding for sales to come in between $117.1 million and $119.5 million and a non-GAAP (adjusted) loss per share between $0.11 and $0.12. For the full year, it expects to post an adjusted loss of between $0.62 and $0.65 per share on sales ranging from $445.4 million to $451.8 million.

The company is valued at roughly 23.8 times the midpoint of its full-year sales target.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of CrowdStrike Holdings, Inc. The Motley Fool has a disclosure policy.

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