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Investing.com -- Bank of America downgraded CrowdStrike (NASDAQ:CRWD) to Neutral from Buy on Wednesday, citing limited upside in the stock’s valuation and growing concerns around future growth rates.
“We favor CrowdStrike’s fundamentals and growth prospects, but believe the valuation leaves only limited upside from the current level of 20x CY26E EV/Sales,” BofA analysts wrote.
The firm raised its price target for the stock to $470 from $420 due to sector-wide multiple expansion but noted the adjustment implies just 3% upside from the recent closing price of $457.
While BofA acknowledged that “underlying trends in 1Q remain healthy,” including 22% ARR growth, 100 basis points above consensus, and strong momentum in Next-Gen SIEM and Cloud Security, it warned that future growth may prove more elusive.
The firm expects revenue growth to decelerate from 21% in 2025 to 18% in 2027.
CrowdStrike’s Falcon Flex (NASDAQ:FLEX) offering continues to see traction, with adoption up 31% sequentially and an average deal size above $1 million in ARR. Flex customers now account for $3.2 billion in total contract value.
However, BofA described the initiative as in the “early stages,” with only 820 customers currently using the package.
Despite management forecasting a reacceleration of growth in the second half of 2026, BofA flagged risks.
“2Q revenue growth guidance of 19% was 130bps below the Street,” due in part to the CCP transition and amortization of the partner program.
“Assuming the company reaches its target 30% OM margin in 2026... the implied PE for the stock would stand at 73x,” analysts said, calling that “another limiting factor.”
While long-term opportunities remain, BofA sees valuation and decelerating growth as headwinds in the near term.
