BofA Securities analyst Tal Liani upgraded SentinelOne Inc S from Neutral to Buy and raised the price target from $26.50 to $35. The stock gained over 4% on Wednesday.
Analyst Anticipation of Competitive Edge
Liani’s re-rating reflects the anticipated near-term profitability and free cash flow (FCF) generation, an acceleration in net new Annual Recurring Revenue (ARR) growth, long-term industry tailwinds, and improving market conditions. This positive channel checks further bolster the near-term outlook for SentinelOne.
SentinelOne’s Performance And Pressure On Competitors
Over the last three months, SentinelOne has seen a significant 78% stock performance improvement, outshining peers like CrowdStrike Holdings, Inc CRWD, Palo Alto Networks, Inc PANW, and Zscaler, Inc ZS.
Future Revenue and Competitive Dynamics
Despite intense competition, SentinelOne will continue its momentum into the fourth quarter of fiscal 2024, with a more positive stance on the company’s market share gains in endpoint security and adjacent markets.
Revenue Growth Forecast and Potential for Upside
The firm’s revenue growth will likely slow from 106% YoY in 2022 to around 46% in 2023 due to various factors, but strong cybersecurity spending forecasted for 2024 and EDR’s prioritization among CISOs support a reacceleration of nnARR growth to +10% in 2024.
Challenges and Forecasted Fourth-Quarter Performance
Despite its prospects, the company trades at a discount compared to its peers, offering a valuation upside, however, challenges like stiff competition and aggressive pricing strategies from larger platforms pose risks.
Current Stock Performance
For SentinelOne, the analyst projected fourth-quarter revenue and EPS of $169.26 million and $(0.04).
Price Action
Price Action: S shares traded higher by 4.51% at $30.30 on the last check Wednesday.
