CrowdStrike has a leg up over its competitors, according to Morgan Stanley. The bank upgraded the cybersecurity stock to overweight from equal weight, also naming it a top pick. Analyst Meta Marshall also lifted her price target to $510 per share from $487, signaling upside of 17%. Despite an expensive valuation, Marshall thinks CrowdStrike is best positioned for outperformance in the coming years. She said the platform looks most likely to gain share and should see AI tailwinds. CRWD 1Y mountain CRWD 1Y chart "[We are] upgrading CRWD as durable platform winner from favorable AI positioning, growing uptake of emerging modules and improving endpoint trends," Marshall wrote. "Valuation expensive, but view 20%+ topline growth potential, improving margin/FCF profile and defensible moat as ample justification." CrowdStrike trades at 89 times trailing earnings, well above the S & P 500's forward multiple of 27.6, according to FactSet. The analyst believes that Falcon Flex, CrowdStrike's subscription model, could continue serving as a tailwind from here. "Recent dislocation in the shares creates an opportunity, particularly with FQ4 earnings and company's appearance at our recent TMT conference re-echoing confidence in positioning. We see the stock continuing to grind higher as Falcon Flex grows at an outsized rate (up 120% YoY in FQ4), company sees 're-Flexes' happening sooner into cycles and endpoint business continues to act as a helpful top of funnel driver," she said. Marshall applauded the strong demand trends currently boosting the cybersecurity industry. She believes that CrowdStrike looks like a clear winner in platform consolidation, and also applauded the company's best-in-class management team. CrowdStrike stock has slipped 7% this year, caught up in the broader sell-off plaguing the software industry. Over the past 12 months, however, shares have surged nearly 41%.
