SentinelOne stock target raised by DA Davidson on improved FY25 outlook By Investing.com

On Wednesday, DA Davidson adjusted its price target for SentinelOne Inc (NYNYSE:E: S), increasing it to $23.00, up from the previous $18.50, while keeping a Neutral rating on the stock. This adjustment follows SentinelOne’s recent financial performance, where the company reported a strong second fiscal quarter, surpassing consensus expectations for Annual Recurring Revenue (ARR) and raising its fiscal year 2025 guidance.

The company’s Fiscal Quarter 2 Net New Annual Recurring Revenue (NNARR) of $43.8 million exceeded the consensus estimate of $39.6 million. However, this figure represents a 10% year-over-year decline, consistent with the first fiscal quarter. The ARR growth rate has decelerated to 32% year-over-year compared to 35% in the previous quarter.

Despite the slowdown in ARR growth, SentinelOne’s improvements in Operating Margin and Free Cash Flow (FCF) margin were highlighted as positive developments. Both metrics, however, remained slightly negative in the second fiscal quarter. The recent service outage experienced by competitor CrowdStrike (NASDAQ:) may provide a temporary boost to SentinelOne’s new business in the near term.

The analyst from DA Davidson noted that while there is potential for a modest increase in new business due to the competitor’s issues, further deceleration in ARR growth into the twenties is expected in the near term. This projection led to the maintained Neutral stance on the stock, as the shares are considered fully valued at approximately 8 times enterprise value to the expected calendar year 2025 revenue.

The new price target reflects the firm’s updated evaluation of SentinelOne’s financial outlook.

In other recent news, cybersecurity firm SentinelOne has been in the spotlight following its impressive financial performance.

The company reported a $44 million increase in Net New Annual Recurring Revenue (NNARR), marking a 16% quarterly growth, and a 33% year-over-year increase in total revenues. Notably, SentinelOne also announced its first-ever positive net income and earnings per share. Multiple analysts have revised their stock price targets for SentinelOne, with Citi raising its target to $25, Baird to $29, BTIG to $28, Jefferies to $24, and Wells Fargo to $29.

Moreover, the company has enhanced its partnership with Google (NASDAQ:) Cloud to bolster enterprise cyber defenses and launched new services, Singularity MDR and Singularity MDR + DFIR. SentinelOne’s amendments to its Articles of Incorporation and bylaws were approved by stockholders, and the Class III director nominees were elected to serve until the 2027 annual meeting.

In the wake of service outages at competitor CrowdStrike, SentinelOne’s CEO highlighted the company’s readiness to capture market share. However, the company refrained from predicting significant short-term business tailwinds from these events. Analysts from various firms, including BTIG and Wells Fargo, have also pointed to SentinelOne’s potential for market share gains in their reports.

These are among the recent developments unfolding within SentinelOne.

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