SentinelOne shares hold rating, price target raised to $24 by Jefferies

On Thursday, SentinelOne Inc (NYNYSE:SE: S) saw its price target increased by Jefferies to $24.00, up from the previous $20.00, while the firm maintained a Hold rating on the stock. The adjustment comes amid expectations of the company's second fiscal quarter performance.

The analyst at Jefferies forecasts SentinelOne's total Annual Recurring Revenue (ARR) to reach approximately $803 million, aligning with consensus estimates and marking a 31% year-over-year growth.

However, this projection also indicates a 12% year-over-year decline in new business ARR when accounting for churn, a decrease from the 6% drop observed in the first fiscal quarter. The second quarter is expected to show half the quarter-over-quarter new business growth compared to the previous year, at 7.5% versus 15%.

The recent cybersecurity incident involving CrowdStrike (CRWD) is believed to have had an impact on SentinelOne's performance in the second quarter. The event likely caused a temporary halt in deal closings across the cybersecurity industry. Despite this, the analyst suggests that the conservative expectations for SentinelOne's second quarter could be an overestimation.

SentinelOne's stock performance has been notable, with shares increasing by 26% following the first fiscal quarter earnings, outpacing the IGV's gain of 13%. The raised expectations reflect the stock's recent momentum and the market's response to the company's earnings report.

Investors and market watchers will be looking to see if SentinelOne can meet these adjusted expectations and continue its growth trajectory in the competitive cybersecurity space.

InvestingPro Insights

As we examine the cybersecurity landscape, it's important to consider the financial health and market performance of key players. CrowdStrike Holdings, Inc. (NASDAQ:CRWD), mentioned in relation to the industry's recent challenges, presents several noteworthy metrics and InvestingPro Tips that may interest investors.

According to InvestingPro data, CrowdStrike boasts a substantial market capitalization of $66.49 billion, reflecting its significant presence in the cybersecurity sector. Despite facing a volatile market, the company has achieved a remarkable year-over-year revenue growth of 34.26% for the last twelve months as of Q1 2023, underscoring its ability to expand its financial base in a competitive market.

InvestingPro Tips highlight that CrowdStrike holds more cash than debt on its balance sheet, which is a reassuring sign of financial stability. Moreover, the company is expected to see net income growth this year, suggesting a positive outlook for profitability. These factors are particularly relevant for investors gauging the potential impact of industry events on the company's financial performance.

While CrowdStrike is trading at a high earnings multiple with a P/E ratio of 496.84, which may raise questions about valuation, the company's high return over the last year, with a price total return of 79.35%, indicates strong market confidence. It's also worth noting that CrowdStrike does not pay a dividend, a common trait among growth-focused tech companies reinvesting earnings into expansion efforts.

For those interested in a deeper dive into CrowdStrike's financials and market performance, InvestingPro offers additional insights. Currently, there are 14 more InvestingPro Tips available for CrowdStrike at https://www.investing.com/pro/CRWD, providing a comprehensive analysis for informed investment decisions.

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