- Barclays analyst Saket Kalia reiterated an Equal-Weight on SentinelOne Inc S and reduced the price target from $20 to $18.
- SentinelOne missed 3Q23 net new ARR by ~$9 million, lowered 4Q23 net new to ~$59 million, and guided FY24 to 50% base ARR growth.
- Kalia highlighted that Microsoft Corp MSFT Defender did not sound like an incremental threat, and excluding Attivo, the analyst came to 25%+ organic net new ARR growth implied in FY24.
- Wells Fargo analyst Andrew Nowinski maintained an Overweight and cut the price target from $23 to $18.
- SentinelOne reported Q3 revenue exceeding the high-end guidance, which is in line with the average beat over the previous four quarters.
- However, Total ARR missed expectations, as net new ARR only increased 26% Y/Y.
- Management attributed the miss to longer sales cycles on large deals and FX headwinds.
- Management now expects the FY25 operating margin to break-even, suggesting the company has a path to profitability over the next two years.
- FCF flow should reach break-even in FY24. The analyst's target multiple is a premium to the peer group average, which he believes is justified given higher long-term growth assumptions.
- Needham analyst Alex Henderson maintained a Buy and lowered the price target from $28 to $19.
- Sentinel pretty much followed the drill set out by previous Security prints.
- They noted elongating selling cycles, particularly on more critical deals, and reported slower growth in EMEA due to the FX reduction in the "purchasing power" of the customers.
- They pointed to several deals sliding out of the quarter as a result and noted they were taking actions to improve profitability even as growth slowed on macro pressures.
- Sentinel stated they continue to have a strong, and in fact, record pipeline and delivered a healthy DBNR of 134%.
- As the analyst had speculated in the print, investors seem to prefer slower growth with more sharply improving Margins.
- Price Action: S shares traded higher by 1.77% at $14.34 on the last check Wednesday.
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