Investing.com — HSBC downgraded CrowdStrike Holdings Inc (NASDAQ: ) to a “hold” rating from a “buy” rating on Thursday, citing a prolonged slowdown in revenue growth, even though the cybersecurity company reported a better-than-expected quarter.
CrowdStrike’s revenue in the third quarter of 2025 grew by 29% from last year, passing $1 billion for the first time. The results exceeded Wall Street’s expectations, driven by seasonal demand and stimulus introduced after the end of July IT. Profits and earnings per share also exceeded forecasts, although operating margins were down slightly from a year earlier.
RBC Capital Markets on Tuesday noted that CrowdStrike’s management performed well following the July close. The incident resulted in issues that were nearing completion but had “no impact on customer value (LTV)”.
However, CrowdStrike’s outlook for the fourth quarter shows a slowdown, with revenue growth expected to decline to 22.1% year-over-year and non-GAAP earnings per share forecast to decline 11%. This reflects the limited demand for additional contracts and other products, according to HSBC.
“Given the sharp drop in new ARR in 3QFY25 and the limited visibility of any further growth going forward, we are now taking a cautious approach to the possibility of this weakness translating into cost reductions,” said an HSBC analyst.
HSBC raised its price target on CrowdStrike to $347 from $339, citing positive earnings estimates. However, the debt settlement lowered the stock, citing its high valuation, trading at 94 times estimated earnings in 2024, compared to a multiple of 37 times, which leaves room for further gains.
CrowdStrike’s shares have rallied since August when HSBC raised the stock after an IT outage, but growth concerns are weighing on investor sentiment.
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