By Senad Karaahmetovic

Morgan Stanley analyst Hamza Fodderwala elevated CrowdStrike shares (NASDAQ) to Overweight and Equal-weight. The price target was $215.00 per share, starting at $195.00.

The three key factors behind the upgrade are: 1) defensive positioning in uncertain macro, 2) sustained market share gain & growing evidence of TAM expansion, and 3) recent pullback provides attractive entry.

The analyst sees a “durable” demand for security stocks in an uncertain macro backdrop. CrowdStrike is described as a “leading cybersecurity franchise.”

“As a next-gen SaaS security platform, CrowdStrike is the leading beneficiary of growing secular trends within security, Fodderwala argues in an upgrade note.

Although the analyst was less positive on CRWD earlier this year, the latest checks showed “limited signs of slowdown.” Moreover, there is evidence that CRWD’s TAM expansion is taking place “beyond their core endpoint security market.”

Fodderwala also sees an “attractive opportunity” given the selloff in CRWD stock.

“At the same time, growth expectations have come down as current valuation of 38X EV/CY23FCF meaningfully discounts 50% forward FCF CAGR from CY21-23e. Looking ahead, several positive catalysts such as a growing federal pipeline, new module uptake, and international expansion should drive further estimates upside,” Fodderwala concluded.

CrowdStrike’s stock price today is up 3.6%