Morgan Stanley Downgrades CrowdStrike to Hold Due to Full Valuation

Morgan Stanley has downgraded CrowdStrike (CRWD) to equal weight from overweight due to "full valuation." Analyst Keith Weiss raised the price target to $495 from $490, but cautioned that the stock is vulnerable to a pullback. Despite the downgrade, CRWD stock has a consensus Moderate Buy rating with a price target of $496.69, implying 4.17% upside from current levels.

Morgan Stanley analyst Keith Weiss has downgraded cybersecurity giant CrowdStrike Holdings Inc. (CRWD) to 'Equal Weight' from 'Overweight', citing concerns over the stock's valuation. The downgrade comes after the stock has surged, with shares climbing approximately 50% from their April lows [1].

Weiss raised the price target to $495 from $490, suggesting a more tempered view on the company's future upside. The analyst noted that much of the anticipated growth is already reflected in the current valuation, leaving limited room for further gains [1].

Despite the downgrade, CrowdStrike's stock remains in 'bullish' territory on Stocktwits, with high message volume levels [1]. The company's first-quarter (Q1) revenue climbed 20% year over year (YoY) to $1.103 billion, slightly below the $1.105-billion consensus estimate, while the adjusted earnings per share (EPS) of $0.73 surpassed the analysts' consensus estimate of $0.66 [1].

Morgan Stanley cited three key factors for their downgrade: full valuation, high investor expectations, and a lack of near-term catalysts. The analysts noted that the current 21x EV/2026E Sales multiple presents a sizable premium to the large-cap software peer average at 12x, even when adjusted for growth rates [2].

Despite the downgrade, CrowdStrike's stock has a consensus 'Moderate Buy' rating with a price target of $496.69, implying 4.17% upside from current levels [1].

References:
[1] https://stocktwits.com/news-articles/markets/equity/morgan-stanley-downgrades-crowdstrike-amid-price-surge/ch892ScR5n3
[2] https://www.investing.com/news/stock-market-news/crowdstrikes-valuation-now-looks-full-says-morgan-stanley-4134233