bernstein socgen group cuts crowdstrike stock rating to market perform

On Friday, Bernstein SocGen Group analysts downgraded CrowdStrike Holdings (NASDAQ:CRWD) stock from Outperform to Market Perform. The decision comes with a price target set at $371.00. The stock, currently trading at $462.94, sits near its 52-week high of $491.20, having delivered an impressive 26.6% return over the past six months.

In their analysis, the firm noted that CrowdStrike remains a favored stock within the cybersecurity sector, demonstrating strong performance with potential for both top-line and bottom-line growth in the coming year. The company’s robust revenue of $4.14 billion and impressive 74.5% gross margin support this view. Despite this, the analysts highlighted the stock’s high valuation compared to their price target, a trend observed across the cybersecurity industry. According to InvestingPro analysis, the stock appears overvalued at current levels.

The analysts pointed out that investors may have increasingly turned to the cybersecurity sector, viewing it as a stable investment amid broader economic uncertainties. They mentioned that cybersecurity is often seen as a necessary expenditure, even if overall IT budgets face constraints.

However, Bernstein SocGen Group expressed concerns about the ability to significantly increase cybersecurity budgets, as they are considered a cost center within a larger IT cost structure. The analysts suggested that the cybersecurity sector might experience a contraction as confidence in broader software markets improves.

In other recent news, CrowdStrike Holdings has been the subject of several analyst upgrades, reflecting its strong financial performance and growth prospects. BMO Capital raised its price target for CrowdStrike to $500, citing the company’s robust quarterly performance and comprehensive security offerings. Piper Sandler also increased their target to $505, highlighting CrowdStrike’s growth outlook and improved forward-looking metrics like annual recurring revenue and free cash flow margin. Similarly, Susquehanna raised their price target to $530, maintaining a Positive rating due to CrowdStrike’s strategic initiatives and stable growth projections.

Cantor Fitzgerald reiterated an Overweight rating with a $475 price target after CrowdStrike reported strong first-quarter results, surpassing consensus estimates for key financial metrics. The company raised its full-year guidance for operating income and earnings per share, though it kept its revenue outlook unchanged. In a significant milestone, CrowdStrike reached $1 billion in sales through its partnership with GuidePoint Security, marking it as the first independent software vendor in the cybersecurity space to achieve this level with a single partner. This collaboration has been instrumental in driving the adoption of CrowdStrike’s Falcon platform, particularly through the Falcon Flex (NASDAQ:FLEX) program. These developments underscore CrowdStrike’s position and potential in the cybersecurity industry.

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