The bull run for cybersecurity stock CrowdStrike has gone far enough, according to Morgan Stanley. Analyst Hamza Fodderwala initiated coverage of the stock at overweight, saying in a note to clients Monday that the company was facing rising competition in a slowing growth environment. "Our checks indicate CrowdStrike's early leadership position is now increasingly challenged by more competitive next-gen [endpoint detection and response] alternatives that are narrowing the functionality gap and offering price points typically at least 15-20%+ less expensive," Fodderwala wrote. "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." Shares of the cybersecurity company have jumped 115% over the past 12 months and are up more than 300% from its pre-pandemic level. However, Morgan Stanley set its price target for CrowdStrike at $247 per share, which is 13% below where the stock closed Friday. Shares slumped 3.3% in premarket trading Monday. The rising competition could lead to less pricing power as well, according to Morgan Stanley. "Our checks point to CrowdStrike typically being 15-20% more expensive (often higher) versus comparable next-gen [endpoint detection and response] competitors. While this premium was historically justified given CrowdStrike's broader platform/managed defense capabilities, competing vendors are closing the gap ... and [are] more flexible on pricing," the note said. -CNBC's Michael Bloom contributed to this report.
CrowdStrike IPO at the Nasdaq exchange June 12, 2019.
The bull run for cybersecurity stock CrowdStrike has gone far enough, according to Morgan Stanley.