S&P 500 rides Apple-led tech rally higher
On Thursday, Scotiabank (TSX:BNS)’s Patrick Colville adjusted the price target for SentinelOne Inc (NYSE:S) shares, reducing it to $19.00 from the previous $26.00. Despite the change, he maintained a Sector Perform rating on the cybersecurity firm’s stock. According to InvestingPro data, analyst targets for SentinelOne currently range from $18 to $36, with the stock trading near $19.30, suggesting the company is slightly undervalued based on InvestingPro’s Fair Value analysis.
SentinelOne’s fourth-quarter net new Annual Recurring Revenue (ARR) slightly missed the consensus estimates, and the fiscal year 2026 (FY26) guidance suggests only a 2% increase in net new ARR. While recent growth has been strong, with revenue increasing 34.38% over the last twelve months, this modest forward guidance has tempered investor enthusiasm, which had been heightened due to a partnership with Lenovo announced in 2024 and expectations that SentinelOne might capitalize on any customer shifts from CrowdStrike (NASDAQ:CRWD) following an incident last summer.
The company also announced the retirement of its legacy Deception product, which has already had a negative impact on the fourth-quarter ARR and is anticipated to reduce FY26’s ARR by approximately $10 million. Despite this setback, SentinelOne reported a positive operating margin for the first time this quarter, which marks a significant milestone for the company. The guidance also indicates continued improvement in profitability for FY26.
Colville notes that while SentinelOne is considered a top-tier company within the industry, the decision to maintain a neutral stance is due to waiting for further evidence that supports investor expectations for improved top-line growth. The company’s recent achievements in profitability are acknowledged as a positive development, yet the analyst suggests a cautious approach until there are clear indicators of sustained revenue acceleration. InvestingPro analysis shows the company maintains a FAIR financial health score, with analysts forecasting profitability in the current fiscal year. For deeper insights into SentinelOne’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, SentinelOne Inc. reported its fourth-quarter earnings for fiscal year 2025, surpassing expectations with an earnings per share (EPS) of $0.04, compared to the forecasted $0.01. The company’s revenue for the quarter reached $226 million, slightly above the anticipated $222.24 million, reflecting a 29% year-over-year increase. Despite these positive results, several analyst firms have adjusted their price targets for SentinelOne. Cantor Fitzgerald reduced its target to $24, maintaining an Overweight rating, while BTIG lowered its target to $27 but kept a Buy rating. Raymond (NSE:RYMD) James and Jefferies both cut their targets to $25, with Raymond James maintaining a Strong Buy and Jefferies a Buy rating.
These adjustments come as SentinelOne’s fiscal year 2026 guidance fell short of consensus estimates, with projected revenue growth of 23% and net new annual recurring revenue of approximately $200 million. The company also plans to retire its Deception product, impacting its guidance by creating a $10 million headwind. Analysts from firms like Cantor Fitzgerald and BTIG suggest that the company’s guidance may be conservative, considering its strong past performance and technological positioning in cybersecurity markets. Additionally, SentinelOne’s partnership with Lenovo and its focus on AI, data, and cloud solutions are seen as potential growth drivers.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.