Morgan Stanley downgraded CrowdStrike (NASDAQ:CRWD) from an Overweight to an Equal Weight rating and revised the price target by $11 to $167 per share. The analysts are cautious regarding the company’s performance leading up to its upcoming Q2 earnings announcement, scheduled on Wednesday.
The analysts pointed out that the consensus estimates for a rebound in the second half of the calendar year 2024 seem optimistic given the challenging demand environment.
The analysts stated that CrowdStrike might need to revise its Annual Recurring Revenue (ARR) guidance again. They also highlighted that the risk-reward balance has become more equitable following the stock’s year-to-date increase of over 45%.
The analysts’ cautious outlook stems from recent assessments and data gathered in the past month. This includes observations of further deceleration in crucial industry sectors, potential obstacles in cloud adoption, and limited potential for improvement in Free Cash Flow (FCF) margins.