Stock Story -
What Happened: Shares of cyber security company SentinelOne (NYNYSE:SE:S) jumped 5.3% in the morning session after Baird analysts Shrenik Kothari and Zachary Schneider initiated coverage on the stock and assigned an Outperform (Buy) rating with a price target of $25. The price target implied a potential 15% upside from where shares traded when the upgrade was announced.
The analysts cited the reason for the bullish rating, adding, "With a strategic focus on cloud security, IoT protection, and AI-driven analytics, SentinelOne remains at the forefront of cybersecurity innovation."
Commenting on the near term potential, the analysts stated "We believe it's poised for continued growth/profitability with platform fueling 40% of 1Q'25 bookings, and cloud/data driving cross-selling opportunities."
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What is the market telling us: SentinelOne's shares are quite volatile and over the last year have had 21 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 4 months ago, when the stock dropped 16.7% on the news that the company reported fourth-quarter results and provided revenue guidance for the upcoming year, which came in below expectations, suggesting a slowdown in demand amidst an intensely competitive landscape with cybersecurity peers like CrowdStrike (NASDAQ:CRWD).
In addition, its net revenue retention rate of 115% missed estimates of 118%. That means its existing customers bought fewer products, and the company is more dependent on new customers (expensive to acquire) to generate growth. Guidance was also underwhelming, with the revenue projections for the next quarter and full year roughly in line with expectations. Overall, this was a tough quarter for SentinelOne.
SentinelOne is down 16.2% since the beginning of the year, and at $21.68 per share it is trading 27.7% below its 52-week high of $30 from February 2024. Investors who bought $1,000 worth of SentinelOne's shares at the IPO in June 2021 would now be looking at an investment worth $510.
