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In the world of cybersecurity, staying one step ahead is everything. When CrowdStrike Holdings, Inc. (CRWD) stumbled with a software glitch on July 19, it was not just a hiccup – it was a global disruption that grounded flights, delayed surgeries, and shook industries to their core. Once a rising star, CrowdStrike took a heavy hit as investors panicked and the stock tumbled.
The chaos opened the door for rival cybersecurity stocks, like SentinelOne, Inc. (S), to make a move. Known for its artificial intelligence (AI)-driven endpoint security, SentinelOne surged as CrowdStrike faltered in July. Wells Fargo analyst Andrew Nowinski now predicts SentinelOne could capitalize on CrowdStrike’s tech blunder by snagging market share, and upgraded the stock in a new note last week.
With its upcoming earnings due out after tonight’s closing bell, here’s a closer look at cybersecurity stock SentinelOne.
About SentinelOne Stock
SentinelOne, Inc. (S), incorporated in 2013 and headquartered in Mountain View, California, is revolutionizing cybersecurity with its AI-driven Singularity platform. This cutting-edge tech aims to outsmart cyber threats by replacing human analysts with autonomous algorithms.
Offering a suite of services from endpoint protection to cloud security, SentinelOne delivers seamless defense across an organization’s digital landscape. Formerly known as Sentinel Labs, the company rebranded in 2021, reflecting its evolution into a leading force in advanced threat detection and response. Its market cap currently stands at $7.78 billion.
Following CrowdStrike’s outage across Microsoft (MSFT) platforms in mid-July, SentinelOne shares took off, gaining more than 21% over the course of just three sessions.
More broadly, the stock has rallied an impressive 49.1% over the past year, easily outpacing the S&P 500 Index’s ($SPX) 27.4% returns. However, S has lagged the broader market in 2024 by dipping about 10% on a YTD basis.
SentinelOne Tops Q1 Estimates
The company reported solid fiscal Q1 earnings results on May 30 that surpassed Wall Street’s forecasts. SentinelOne generated $186.4 million in revenue, up 40% year over year, driven by the rising adoption of its AI-powered security solutions. The Q1 GAAP net loss of $70.1 million, or $0.23 per share, was improved from last year’s loss of $106.9 million or $0.37 per share.
What’s more, SentinelOne’s revenue growth rate outpaced its bigger rivals in the AI cybersecurity arena. CrowdStrike’s Q1 revenue climbed 33%, while Palo Alto Networks (PANW) reported a 15% rise in its fiscal Q3 revenue. Despite being smaller, SentinelOne is proving to be a contender.
Profitability has been a sticking point for SentinelOne, but the company achieved breakeven EPS on an adjusted basis for the first time ever, as well as its first quarter of positive free cash flow, at $33.76 million. With more than $1 billion in cash and equivalents and no debt, SentinelOne’s balance sheet is rock solid.
For its upcoming fiscal Q2 report, scheduled for tonight, Tuesday, Aug. 27 after the market closes, SentinelOne management expects to report $197 million in revenue, up 32% year over year. Analysts expect the company to narrow its Q2 net losses by 23.1% to $0.20 per share, or breakeven on an adjusted basis.
Looking ahead, SentinelOne anticipates fiscal 2025 revenue between $808 million and $815 million, targeting 31% growth at the midpoint.
“Importantly, we remain on track for turning the page on profitability within fiscal '25, delivering positive operating income by the end of the year,” said CFO Dave Bernhardt on the Q1 conference call.
What Do Analysts Expect for SentinelOne Stock?
Last week, Wells Fargo analyst Andrew Nowinski upgraded SentinelOne to “Overweight” from “Equal-Weight” and lifted the stock’s price target to $29 from $19 ahead of earnings.
In a note to clients, the analyst explained, “We believe SentinelOne is gaining share, recently at the expense of CrowdStrike, which should translate into stronger revenue growth. Moreover, the pipeline looks very strong, which should enable share gains to continue going forward.”
Analysts at JPMorgan and Barclays don’t think the CrowdStrike outage will have much of an impact for S, but both firms raised their price targets for SentinelOne ahead of tonight’s earnings reports. JPMorgan raised the price target to $27 from $25, while maintaining an "Overweight" rating, and Barclays upped the stock's target price to $26 from $22 while backing an "Equal-Weight" rating.
The stock has a consensus “Moderate Buy” rating overall. Among the 28 analysts covering SentinelOne, 18 suggest a “Strong Buy,” one advises a “Moderate Buy,” and nine analysts maintain a "Hold" rating.
The stock trades almost flat with its average price target of $25.86. However, the Street-high price target of $37 suggests that SentinelOne stock could rally as much as 49%.
On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
