On Thursday, CrowdStrike Holdings Inc. (NASDAQ:CRWD) stock experienced a significant shift in market expectations as Redburn-Atlantic changed its rating on the cybersecurity firm's stock from Buy to Sell. The firm also adjusted the price target to $275 from the previous $380.
The downgrade comes amid concerns that CrowdStrike's revenue growth may not keep pace with the stabilizing endpoint market and potential pressures from budget optimizations.
Redburn-Atlantic pointed to several factors that previously fueled CrowdStrike's demand, including robust endpoint growth during the pandemic, the expansion of IoT devices, and the increasing need for Managed Detection and Response (MDR) services due to talent and resource limitations.
However, the firm now suggests that these catalysts may not be as influential moving forward. The consensus revenue growth expectations for CrowdStrike do not appear to account for the endpoint market's stabilization or the deflationary impacts that could arise from Generation-Artificial Intelligence (Gen-AI).
Moreover, Redburn-Atlantic highlighted the intense competition in other areas of CrowdStrike's business, such as cloud, identity, and Security Information and Event Management (SIEM). The firm noted that these segments are crowded and face heightened competition, particularly from large players like Microsoft (NASDAQ:MSFT) and Google (NASDAQ:GOOGL), which continue to enhance their respective offerings.
In other recent news, CrowdStrike Holdings experienced a shift in its stock rating as Piper Sandler adjusted its view from Overweight to Neutral. This comes as CrowdStrike's shares have achieved significant growth, reaching the highest revenue multiple among public software companies with a market cap over $75 billion.
At the same time, CrowdStrike is set to join the S&P 500 index, a development that follows the company's impressive financial performance with a 33% year-over-year increase in revenue and a 34% rise in subscription revenue.
On the other hand, BMO Capital Markets revised its stock price target for CrowdStrike down to $410, despite the company's strong Q1 performance. CrowdStrike's guidance for the upcoming quarter indicates expectations for net new ARR growth in the double-digit to low teens percentage range year-over-year.
Furthermore, CrowdStrike saw its stock price target increased to $400 from $390 by FBN Securities, maintaining an Outperform rating on the stock. This adjustment follows the cybersecurity firm's robust financial results for the first quarter, including a 33% year-over-year increase in revenue.
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