U.S. stocks edge higher; solid earnings season continues
On Thursday, Raymond (NSE:RYMD) James analyst Adam Tindle adjusted the price target for SentinelOne Inc (NYSE: S) shares, reducing it to $25 from the previous $30, while continuing to endorse the stock with a Strong Buy rating. According to InvestingPro data, analysts maintain a bullish consensus with price targets ranging from $18 to $36, suggesting significant upside potential from the current price of $19.30. Tindle’s reassessment follows SentinelOne’s fourth fiscal quarter results for January 2025, which demonstrated better-than-expected revenue and profitability.
The company’s Net New Annual Recurring Revenue (NNARR), an important metric for real-time growth, fell short of expectations. However, Tindle noted that the NNARR could have met or surpassed these benchmarks if not for a product end-of-life (EoL) decision made in the fiscal fourth quarter. This EoL decision also influenced the initial fiscal year 2026 guidance, which was below NNARR targets but would have been higher without the EoL adjustment. InvestingPro data shows strong revenue growth of 34.4% in the last twelve months, with analysts forecasting 32% growth for the current fiscal year.
Despite these setbacks, Tindle emphasized SentinelOne’s strong fundamental and technological positioning. He highlighted that non-Endpoint Detection and Response (EDR) products now account for over 50% of bookings, tapping into three key cybersecurity markets: artificial intelligence, data, and cloud. Additionally, the company has reached a milestone by stopping its operating losses in the fourth fiscal quarter, with guidance for fiscal year 2026 suggesting further profitability alongside robust growth. InvestingPro analysis reveals a healthy balance sheet with more cash than debt and a strong gross profit margin of 73.6%, supporting the company’s path to profitability.
Tindle also pointed out the significance of SentinelOne’s growth being driven by new customer acquisition, which is more costly but demonstrates the company’s aggressive market expansion. This is evidenced by the company’s Net Retention Rate (NRR) of 110% this quarter, which Tindle believes could be a concern to some but is indicative of the company’s focus on acquiring new customers. The success in modules beyond core EDR indicates potential for customer expansion as the adoption of cloud and AI technologies increases.
In conclusion, Tindle expressed confidence in SentinelOne’s potential, noting that current market misinterpretations and the impact of the late EoL decision might deter some large investors for the time being. However, he sees this as an opportunity for patient shareholders to invest at what he considers attractive entry points, given the company’s fundamentals relative to its valuation. With a market capitalization of $6.2 billion and InvestingPro’s Fair Value assessment suggesting the stock is fairly valued, investors seeking deeper insights can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which provides detailed analysis of SentinelOne’s financial health, growth prospects, and competitive positioning.
In other recent news, SentinelOne Inc. (NYSE:S) reported its fourth-quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $0.04, compared to the forecasted $0.01. Revenue for the quarter reached $226 million, slightly above the forecast of $222.24 million, marking a 29% year-over-year increase. The company highlighted significant growth in its annual recurring revenue (ARR) and innovations in AI-driven security solutions. Despite this earnings beat, Jefferies analyst Joseph Gallo adjusted the price target for SentinelOne, reducing it to $25 from the previous $30, while maintaining a Buy rating. This revision followed SentinelOne’s fiscal fourth-quarter results, which showed a 27% year-over-year increase in ARR, slightly missing consensus expectations. The company’s revenue guidance for fiscal year 2026 indicated a 23% year-over-year growth, falling short of the consensus projection of 26%. Jefferies continues to endorse SentinelOne based on the belief in the company’s strong technological foundation and market positioning. The firm also recognizes an emerging opportunity with Lenovo and appreciates the incremental prudence of SentinelOne’s Chief Financial Officer.
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