Crowdstrike Holdings (NASDAQ:CRWD) slumped in today’s trading session after five-star Piper Sandler analyst Rob Owens downgraded the cybersecurity company to a Hold from a Buy, citing its high valuation. Indeed, Year-to-date, CRWD has surged by more than 45%. However, the analyst kept his $400 price target on the stock unchanged, which implies an upside potential of 4.7% from current levels.
It’s worth noting that, so far, Owens has enjoyed a 73% success rate on CRWD stock, with an average return of 73.82% per rating.
Owens’ Rationale for the Downgrade
Owens noted that his industry check has not revealed any disruption in CRWD’s momentum or competitive position so far. However, the analyst commented that with the cybersecurity company generating $3.6 billion in annual recurring revenue, which could potentially exceed $4 billion in FY25, it may be more difficult for the stock to achieve a “meaningful upside.”
This could be as “the law of large numbers [begins] to weigh on overall growth rates for the security leader — which could cause returns to lag other names in the space.”
The analyst added that CrowdStrike had the highest enterprise value to sales multiple (18.9x) among software companies that have a market capitalization exceeding $75 billion. Despite CRWD’s strong prospects and metrics, Owens believes that the current valuation already reflects these strengths.
What Is the Price Target for CRWD?
Analysts remain bullish about CRWD stock, with a Strong Buy consensus rating based on 31 Buys (excluding Owen’s updated view). The average CRWD price target of $399.96 implies an upside potential of 4.8% from current levels.
