Piper Sandler Downgrades CrowdStrike Due to High Valuation and Lack of Near-Term Catalysts

Lina Portman2 days ago

0 1 minute read

Key points to remember

CrowdStrike was downgraded by Piper Sandler due to its high valuation and lack of near-term catalysts.
Analysts downgraded their rating from “overweight” to “neutral.”
Piper Sandler highlighted CrowdStrike's record stock price and said the benefits of future opportunities are already priced into it.

Shares of CrowdStrike (CRWD) fell in intraday trading Tuesday, a day after the stock received a downgrade from Piper Sandler, which cited the cybersecurity company's high valuation and lack of near-term catalysts.

Piper Sandler cut its rating to neutral from overweight, while keeping its price target at $400. CrowdStrike shares hit an all-time high of $392.15 on Monday.

Analysts 'remain enthusiastic' but risk/reward ratio 'less favourable at present'

Analysts said that while they “remain enthusiastic about the next stage, with plenty of incremental growth opportunities,” the risk/reward ratio on the stock is “less favorable at present given the strong run-up.”

They noted that CrowdStrike's already high annual recurring revenue (ARR) and estimated fiscal year revenue will make any significant upside difficult, as “the law of large numbers is expected to begin to weigh on overall growth rates.”

The analysts added that they remained enthusiastic about the company's “second act,” which they said “undeniably has a wealth of opportunities ahead of it.” However, they believe that “much of this is reflected in the valuation at current levels.”

CrowdStrike shares fell 2.1% to $384.01 as of 11:32 a.m. ET Tuesday, but are up about 50% year to date.