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On Thursday, SentinelOne Inc (NYSE:S) experienced a downgrade in its stock rating from ’Overweight’ to ’Equal Weight’ by analysts at Wells Fargo (NYSE:WFC). Accompanying the rating change, the price target for the cybersecurity company was also reduced to $18 from the previous $22. Trading at $19.67, the stock has seen 22 analysts revise their earnings estimates downward for the upcoming period, according to InvestingPro data. The adjustment comes after SentinelOne reported a disappointing first quarter, which the Wells Fargo analyst attributed to a spending pause in April.
SentinelOne’s performance in May showed some recovery in demand, but management’s guidance suggested a 16% year-over-year decline in net new Annual Recurring Revenue (ARR). While the company’s revenue grew 32.25% over the last twelve months to $821.46 million, the expected growth in net new ARR was not achieved. According to the Wells Fargo analyst, despite favorable conditions, including easy comparisons from the previous year and a service outage at competitor CrowdStrike (NASDAQ:CRWD), SentinelOne’s growth has been lackluster.
The analyst’s commentary highlighted the missed opportunity for SentinelOne to capitalize on the situation and achieve strong net new ARR growth. The downgrade reflects Wells Fargo’s reassessment of SentinelOne’s growth prospects, given the recent performance and management’s forward-looking statements.
SentinelOne’s first-quarter earnings miss and the subsequent guidance for a decline in net new ARR indicate challenges in the cybersecurity firm’s ability to expand its customer base and increase revenue at the anticipated pace. The reduction in the price target to $18 from $22 by Wells Fargo suggests a recalibration of the stock’s value in light of these factors. InvestingPro analysis shows the company maintains strong financial health with more cash than debt and liquid assets exceeding short-term obligations.
Investors and market watchers will be keeping a close eye on SentinelOne’s future performance to see if the company can address the issues identified and improve its growth trajectory. The Wells Fargo downgrade serves as a notable shift in expectations for the cybersecurity provider. According to InvestingPro Fair Value analysis, SentinelOne currently appears slightly undervalued. Subscribers can access the comprehensive Pro Research Report, which includes detailed financial analysis, 6 additional ProTips, and expert insights about SentinelOne’s future prospects.
In other recent news, SentinelOne has seen several notable developments. TD Cowen revised its outlook on SentinelOne, lowering the price target from $35.00 to $26.00 while maintaining a Buy rating. This adjustment followed the company’s fiscal year 2026 financial guidance, which did not meet Street estimates due to macroeconomic pressures and a product sunset impacting annual recurring revenue. Meanwhile, Bernstein SocGen also reduced its price target for SentinelOne from $30.00 to $27.00, highlighting that while fourth-quarter revenue exceeded guidance, the annual recurring revenue did not meet expectations. Despite this, Bernstein SocGen continues to rate the stock as Outperform.
In another analyst update, Stephens initiated coverage on SentinelOne with an Overweight rating and a $25.00 price target, citing the company’s strong position in the endpoint security market and potential for over 20% top-line growth. Stifel analysts maintained their Overweight rating and a $24.00 price target, emphasizing SentinelOne’s resilience in the cybersecurity sector despite economic headwinds. Additionally, SentinelOne announced the launch of its Global PartnerOne Program, aimed at enhancing partners’ go-to-market strategies and accelerating growth in a competitive market. This program includes tailored tracks for various partner types, supporting their operations and improving customer satisfaction. These developments reflect the dynamic environment SentinelOne is navigating amid analyst evaluations and strategic initiatives.
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