Citi set a Street-low price target on the cybersecurity stock
Citigroup initiated coverage on CrowdStrike Holdings Inc (NASDAQ:CRWD) with a "sell" rating and a $43 price target -- a nearly 29% discount to last Friday's close at $60.27, and the lowest on Wall Street. The brokerage firm expressed concern over the cybersecurity stock's valuation, echoing a bear note issued by Goldman Sachs on Friday.
In reaction, CRWD stock is down 7.1% to trade at $56, on track for its fifth straight loss. The shares have been sliding steadily since tagging a record high of $101.88 in late August, and bottomed at a record low of $51.61 on Sept. 30. A rebound attempt off here stalled out near the security's 30-day moving average.
In spite of this, sentiment toward CrowdStrike is still relatively upbeat. While the majority of analysts maintain a "buy" or better rating on the stock, speculators at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open more than two calls for every put over the last 10 days.
However, there could be an ulterior motive to this run toward long calls. Short interest on CRWD stock spiked 53.7% in the most recent reporting period to 6.41 million shares, representing a lofty 35% of the equity's available float. As such, shorts may be purchasing calls to hedge against any upside risk.