Crowdstrike (CRWD, Financial) slides almost 2% premarket after Morgan Stanley downgrades to equal-weight on full valuation following a near 50% rally since April lows.
Morgan Stanley analysts led by Keith Weiss said they are stepping to the sidelines given full valuation after the nearly 50% bounce since April and rising growth expectations.
The firm raised its price target to full-form $495 from $490 while acknowledging CrowdStrike remains a long-term market leader in cybersecurity with direct exposure to AI driven consolidation. “The second half acceleration we expect now looks well priced in the shares,” the analysts said.
The move follows a broader pullback in growth names this week as investors book profits in tech and other high growth sectors after extended rallies amid lingering Fed policy concerns.
Weiss's team added that the second quarter print is unlikely to shift the long-term thesis as investor attention remains on the second half of the year. They highlighted limited visibility into Customer Commitment Package renewals and Falcon Flex contract impacts on revenue recognition and margins and said a more balanced risk reward profile calls for waiting on better entry points.
Investors should care because the stock's rally has already priced in the acceleration analysts expect, leaving limited near-term upside and skewing risk reward toward cautious positioning. Investors will eye CrowdStrike's second quarter earnings in late July for clearer insight into growth drivers and margin trends.
