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Nov. 15, 2021, 5:12 p.m. EST

CrowdStrike stock drops more than 10% as Morgan Stanley starts coverage with sell rating

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By Wallace Witkowski

CrowdStrike Holdings Inc. shares dropped more than 10% Monday after Morgan Stanley initiated a sell rating on the cybersecurity stock amid a large majority of buy ratings from Wall Street analysts.

CrowdStrike /zigman2/quotes/212513426/composite CRWD -2.18% shares sank as much as 13% to an intraday low of $247.75 Monday before closing the regular session down 10.6% at $254.15. On the other hand, CrowdStrike shares are still up 92% over the past 12 months, compared with a 38% gain on the ETFMG Price Cyber Security ETF /zigman2/quotes/207892345/composite HACK -2.08% , a 31% gain on the S&P 500 index /zigman2/quotes/210599714/realtime SPX -1.84% , and a 34% rise on the tech-heavy Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -2.60% .

In a Monday note entitled “It’s a Matter of Price,” Morgan Stanley analyst Hamza Fodderwala initiated coverage on CrowdStrike with an “underweight” rating and a $247 price target.

While Fodderwala noted that CrowdStrike is a market leader in cloud-based endpoint detection and response, the Morgan Stanley analyst said his checks indicate there are other next-generation competitors in the sector like SentinelOne Inc. /zigman2/quotes/208685669/composite S -3.47% that are offering services at 15% to 20% lower prices.

Morgan Stanley initiated an overweight rating on SentinelOne in late July, after the company went public at the end of June.

“We think this competitive dynamic will make sustaining the current pace of share gains more difficult and drive uncertainty on the pace of topline deceleration through 2022, particularly as WFH-driven tailwinds since last year begin to normalize,” Fodderwala said.

Of the 27 analysts who cover CrowdStrike, 22 have buy ratings, three have hold ratings and two have sell ratings, along with an average price target of $310.13, according to FactSet Research.

Earlier in the month, another analyst, BTIG’s Gray Powell, downgraded CrowdStrike to a neutral rating from a buy, noting increased competition from SentinelOne.

/zigman2/quotes/212513426/composite
US : U.S.: Nasdaq
$ 172.85
-3.85 -2.18%
Volume: 4.74M
Jan. 18, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$40.53 billion
Rev. per Employee
$378,760
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/zigman2/quotes/207892345/composite
US : U.S.: NYSE Arca
$ 56.10
-1.19 -2.08%
Volume: 300,226
Jan. 18, 2022 4:00p
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/zigman2/quotes/210599714/realtime
US : S&P US
4,577.11
-85.74 -1.84%
Volume: 2.74B
Jan. 18, 2022 4:56p
loading...
/zigman2/quotes/210598365/realtime
US : Nasdaq
14,506.90
-386.86 -2.60%
Volume: 4.43M
Jan. 18, 2022 5:16p
loading...
/zigman2/quotes/208685669/composite
US : U.S.: NYSE
$ 41.20
-1.48 -3.47%
Volume: 3.01M
Jan. 18, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$11.39 billion
Rev. per Employee
$198,860
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