SentinelOne Analysts Flag Its AI-Driven Security And Market Growth Potential As Key Catalysts For Optimism

JMP Securities analyst Trevor Walsh reiterated SentinelOne Inc S with a Market Outperform and a $33 price target.

The company reported solid fourth-quarter results Wednesday after the market close, with revenue of $174.2 million (consensus $169.4 million), up 38% Y/Y, ending ARR of $724.0 million (consensus $722.7 million), up 39% Y/Y, and RPO up 47% Y/Y and 15% Q/Q (attributable to larger contracts).

CEO Tomer Weingarten commented, “most of our growth comes from new accounts,” highlighting a particularly notable deal where a significant energy company replaced Splunk Inc SPLK SIEM with SentinelOne’s Singularity Data Lake. The stock is down ~5.3% year-to-date (after sliding in the after-market reaction) vs. up 7.7% for the Russell 3000, Walsh said.

The analyst viewed the opportunity in front of SentinelOne as significant as he reiterated a unique endpoint security architecture emphasizing an AI-driven approach to disrupt a $100 billion TAM, a business that continues to integrate new technology tuck-in acquisitions to enhance the product smartly, showcased by 1/3 of new bookings representing products beyond core endpoint and marked improvements in profitability. Walsh guided to revenue of $181.0 million (prior $185.6 million).

DA Davidson analyst Rudy Kessinger maintained SentinelOne with a Neutral and raised the price target from $22 to $24.

The quarterly results were solidly ahead, particularly on operating margins, although the ARR beat was very modest relative to what CrowdStrike Holdings, Inc CRWD just reported last week. 

The stock price decline is not enough to get the analyst off the sidelines. Kessinger continues to believe that SentinelOne has robust technology & that they are building a compelling cybersecurity platform. However, they continue to find shares fully valued given the growth & profitability profile. 

While SentinelOne is one of the fastest-growing SaaS companies in the public markets & similar growth, SaaS peers are trading at a much higher valuation; those peers also have significantly higher margins than SentinelOne, thereby inhibiting a re-rating over the near term. Kessinger projects first-quarter revenue of $181.0 million (prior 176.0 million).

Needham analyst Alex Henderson reiterated SentinelOne with a Buy and a $31 price target. Henderson said Sentinel shares are selling off post-print; the results demonstrated real and continuing progress. 

Revenue and ARR, up 38%-39%, beat expectations by 4% and 1%, respectively, even as management delivered a sharp, better-than-forecasted improvement in operating margins, and EPS came in $0.02 ahead at a slight $(0.02) loss. 

A strong print all around. However, the guidance for first-quarter and fiscal 2025 ending January are just in line, hence the sell-off. Yet, the analyst noted another strong year of growth, up 36% in the first quarter and 31% at the midpoint of the guide for the year, while operating margins continue to improve. 

Despite absorbing two acquisitions, the combination of solid growth and significant operating margin improvement is impressive and still worthy of investment. Henderson projects first-quarter revenue of $181.0 million.

Price Action: S shares traded lower by 18.12% at $22.88 on the last check Thursday.