CrowdStrike CRWD has been one of the most prolific security software providers in recent times thanks to its Falcon platform. However, a faulty Falcon update on Jul 19 resulted in a global IT outage. CRWD shares dropped 11% on Jul 19 and have been on a downward spiral since then.
The blue screen of death (BSOD) outage reportedly impacted 8.5 million Windows machines. In its preliminary Post Incident Review, CRWD has blamed the BSOD outage on a bug in the Rapid Response Content, which somehow went undetected during validation checks.
Losses from the massive IT outage are now expected between $400 million and $1.5 billion, per cyber analytics firm Cybercube, as cited by Reuters. Insurer Parametrix estimates insured losses between $540 million and $1.08 billion for Fortune 500 companies, excluding Microsoft.
Apart from the staggering losses, recovery from the IT outage is expected to take several days. CRWD's software runs at the kernel level of a computer, which helps it to detect cyberattacks more efficiently. However, computers affected by the bug are required to be rebooted manually to safe mode by an administrator and then delete the affected file. This is expected to be a time-consuming process.
The incident has significantly impacted CrowdStrike's reputation and brand value. CRWD is taking correctional measures as per the PIR, including enhanced software testing procedures, as well as a plan to conduct validation exercises through third-party. However, prospects don't look bright as the reputational damage can result in customer exodus, thereby hurting top-line growth.
Since the incident, CRWD shares have declined more than 15%. Year-to-date, shares of this Zacks Rank #5 (Strong Sell) company have gained 1.1%, underperforming the Zacks Computer & Technology sector's return of 18.6%.
YTD Performance
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3 Better Bets Than CRWD Stock
Here, we have picked three security stocks that are better bets than CrowdStrike. These stocks have a favorable combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Per the Zacks proprietary methodology, stocks with this favorable combination offer good investment opportunities.
Okta OKTA is benefiting from an expanding clientele, driven by the strong adoption of its Identity Threat Protection solution. It exited the first quarter of fiscal 2025 with the total customer count increasing 6% year over year to 19,100.
Okta's expanding portfolio has been a key catalyst. Its Okta AI, a suite of AI-powered capabilities embedded across both Workforce Identity Cloud and Customer Identity Cloud, empowers organizations to harness the power of AI to build better experiences and protect against cyberattacks.
For fiscal 2025, Okta expects revenues between $2.53 billion and $2.54 billion, indicating year-over-year growth of 12%. The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $2.53 billion, indicating year-over-year growth of 11.91%.
OKTA expects fiscal 2025 non-GAAP earnings between $2.35 and $2.40 per share. The consensus mark for earnings is pegged at $2.40 per share, up 5.3% over the past 60 days.
Okta, Inc. Price and Consensus
Okta, Inc. price-consensus-chart | Okta, Inc. Quote
Okta currently sports a Zacks Rank #1 and has a Growth Score of A.
CyberArk Software CYBR is benefiting from the rising demand for cyber security and privileged access security solutions due to the long list of data breaches and increasing digital transformation strategies.
CyberArk's security platforms simplify security infrastructure for organizations by protecting against, detecting and responding to cyber-attacks before the security of vital systems is compromised. This reduces the total cost of ownership, thereby giving the organization a competitive edge. CYBR's strategic mix shift toward software-as-a-service and subscription-based solutions is driving top-line growth.
For 2024, CyberArk expects revenues in the range of $928-$938 million, up from the previous guidance range of $920-$930 million. The Zacks Consensus Estimate for revenues is currently pegged at $935.16 million, suggesting 24.38% growth over 2023.
CyberArk Software Ltd. Price and Consensus
CyberArk Software Ltd. price-consensus-chart | CyberArk Software Ltd. Quote
CYBR carries a Zacks Rank #2 at present and has a Growth Score of A. The consensus mark for 2024 earnings has been steady at $2.04 per share over the past 60 days.
Zscaler ZS is benefiting from a strong portfolio. Its Edge cloud for policy enforcement, multi-tenancy, proxy for SSL or TLS inspection and zero trust network access are well poised to gain adoption amid the thriving remote work culture.
Portfolio expansion through acquisitions with the likes of Avalor, Canonic Security and ShiftRight is noteworthy. Avalor acquisition expands Zscaler's Zero Trust Exchange data, incorporating more than 150 pre-built integrations to empower customers in proactively identifying and predicting critical vulnerabilities while enhancing operational efficiencies. Canonic Security improved ZS' focus on protecting against attacks that target software-as-a-service. ShiftRight buyout boosted its cloud security offerings.
For fiscal 2024, Zscaler forecasts revenues in the range of $2.14-$2.142 billion, up from the previous guidance of $2.118-$2.122 billion. Calculated billings are now expected in the range of $2.603-$2.606 billion, up from the earlier guidance of $2.55-$2.57 billion.
The Zacks Consensus Estimate for fiscal 2024 revenues is pegged at $2.14 billion, indicating 32.39% year-over-year growth. The consensus mark for fiscal 2024 earnings is pegged at $2.99 per share, up 9.5% over the past 60 days.
Zscaler, Inc. Price and Consensus
Zscaler, Inc. price-consensus-chart | Zscaler, Inc. Quote
Zscaler has a Zacks Rank #2 at present and a Growth Score of A.
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