Piper Sandler Downgrades CrowdStrike on High Valuation, Few Near-Term Catalysts

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Bill McColl
Bill McColl
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Bill McColl has 25+ years of experience as a senior producer and writer for TV, radio, and digital media leading teams of anchors, reporters, and editors in creating news broadcasts, covering some of the most notable news stories of the time.

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Published July 02, 2024
A CrowdStrike logo seen displayed on a smartphone

Mateusz Slodkowski / SOPA Images / LightRocket via Getty Images

Key Takeaways

  • CrowdStrike was downgraded by Piper Sandler because of its high valuation and lack of near-term catalysts.
  • Analysts lowered their rating to "neutral" from "overweight."
  • Piper Sandler pointed to CrowdStrike's record-high stock price and said the benefits from its opportunities ahead are already baked into that.

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

Piper Sandler lowered its rating to "neutral" from "overweight," keeping unchanged its price target of $400. CrowdStrike shares recorded an all-time closing high of $392.15 Monday.

Analysts 'Remain Excited' But Risk/Reward 'Less Favorable at This Time'

The analysts said that while they "remain excited about the next act, with many incremental growth opportunities," the risk/reward on the stock is "less favorable at this time given the strong run."

They noted that CrowdStrike’s already high annual recurring revenue (ARR) and estimated fiscal year revenue will make it difficult for any meaningful upside to occur, as “the law of large numbers should begin to weigh on overall growth rates.”

The analysts added that they remain excited about “the second act” for the company, which they argued “undeniably has a multitude of opportunities ahead.” However, they believe that “much of this is reflected in the valuation at current levels.”

Shares of CrowdStrike slipped 2.1% to $384.01 as of 11:32 a.m. ET Tuesday but are up about 50% year-to-date.

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