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On Thursday, Needham maintained a Buy rating on SentinelOne Inc (NYNYSE:SE: S) but reduced the stock’s price target to $23 from $32, still above the current trading price of $19.30. According to InvestingPro data, analyst targets range from $18 to $36, with the stock currently trading 34% below its 52-week high of $29.29. The adjustment followed SentinelOne’s mixed fourth-quarter financial results for fiscal year 25 and the initial guidance for fiscal year 26, which did not meet investor expectations.
SentinelOne achieved a 27% year-over-year growth in annual recurring revenue (ARR), reaching $920.1 million, marginally missing the consensus. The company’s strong revenue growth of 34.38% and healthy gross profit margin of 73.6% demonstrate solid business fundamentals. However, the revenue guidance for the first quarter and the entire fiscal year 26 was below the Street’s expectations by $8 million and $19 million, respectively. Despite this, management emphasized positive demand trends and the adoption of their emerging solutions, including Cloud, AI, and SIEM technologies, which accounted for over 50% of the new bookings in fiscal year 25.
The company anticipates approximately $200 million in net new ARR for fiscal year 26, which would result in an ARR of around $1.12 billion, reflecting a 22% year-over-year increase. This growth projection includes the impact of retiring their legacy Deception solution, which is expected to affect the first half of the fiscal year before business picks up again in the second half. InvestingPro analysis shows the company maintains a strong balance sheet with more cash than debt, while analysts expect profitability this year.
SentinelOne’s stock experienced a decline in after-hours trading, indicating investor skepticism regarding the forecasted ramp-up in ARR and revenue in the second half of fiscal year 26, especially amid rising macroeconomic uncertainties. Based on InvestingPro’s Fair Value analysis, the stock appears fairly valued at current levels.
In other recent news, SentinelOne Inc has announced its fourth-quarter earnings for fiscal year 2025, revealing a mixed financial performance. The company exceeded FactSet consensus estimates in revenue, operating income, and earnings per share, but did not meet expectations for gross margin, annual recurring revenue (ARR), and billings. SentinelOne’s fiscal year 2026 guidance projects a 23% growth in top-line revenue and approximately $200 million in net new annual recurring revenue, which falls short of consensus estimates. The company is also retiring its Deception product, which negatively impacted ARR and is expected to further reduce fiscal year 2026 ARR by $10 million.
Analysts have responded to these developments with various adjustments to SentinelOne’s stock price target. Scotiabank (TSX:BNS) lowered its target to $19 while maintaining a Sector Perform rating, and Cantor Fitzgerald reduced its target to $24 but kept an Overweight rating. BTIG and Raymond (NSE:RYMD) James both cut their targets to $27 and $25, respectively, with BTIG maintaining a Buy rating and Raymond James a Strong Buy. Jefferies also adjusted its price target to $25, upholding a Buy rating.
Despite the challenges, SentinelOne achieved a positive operating margin for the first time in the recent quarter and has shown improvement in profitability. Analysts from firms like BTIG and Jefferies highlight the company’s strong technological position and potential growth opportunities, such as its partnership with Lenovo. These developments are crucial for investors assessing SentinelOne’s market position and growth potential in the competitive cybersecurity sector.
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