CrowdStrike Stock Sinks. Morgan Stanley Initiates at Underweight on Increased Competition.

The analysts at Morgan Stanley said they see “growing signs of increased competitive and pricing pressure likely making share gains more difficult” forCrowdStrike into 2022.

“The potential for decelerating revenue growth creates an unfavorable risk-reward at ~26X CY23 sales,” Morgan Stanley wrote in a note.

Morgan Stanley noted how the company has “quickly risen to market leadership” with its “platform offering ease of deployment, strong managed services and an AI-driven approach that better adapts to an evolvingthreat landscape compared to legacy incumbents.”

But they added that their checks indicate “CrowdStrike’s early leadershipposition is now increasingly challenged by more competitive next-gen EDRalternatives that are narrowing the functionality gap and offering price pointstypically at least 15-20%+ less expensive.”

BTIG Securities analyst Gray Powell earlier this month cut his rating on CrowdStrike to Neutral from Buy, saying growing competition, particularly from SentinelOne (S), in endpoint security software could slow down the company’s growth rate. 

“Our checks lead us to believe that competition is on the rise and that tailwinds to CrowdStrike’s growth in 2022 will downtick from 2021,” Powell said in a research note. He thinks the company’s growth rate likely will slow, leaving investors with the challenge of figuring out how rapidly it will weaken. 

Analysts at Mizuho, contrasting sharply with Morgan Stanley, lifted their price target on CrowdStrike to $360 a share from $330. They maintained a Buy rating on the stock in a note Monday.

Analysts surveyed by FactSet rate the stock at Overweight with an average price target of $310.13. 

Write to Joe Woelfel at [email protected]