On Thursday, Loop Capital maintained its Buy rating on SentinelOne Inc (NYNYSE:SE:S) and increased the stock's price target to $30 from $28. The firm's decision comes after SentinelOne presented a steady fourth fiscal quarter, marking the third consecutive term of at least meeting expectations. The cybersecurity company also offered guidance for the first quarter and fiscal year 2025 that aligned with projections.
SentinelOne's consistent performance over the past three quarters has shown a stabilization in business trends and an adjustment in sales execution to the challenging current market. The company's Net Retention Rate (NRR) has remained steady at over 115% during this period.
Despite this, SentinelOne's shares dipped to $24.50 in after-hours trading, possibly due to investor expectations of more than just in-line results, especially following two quarters where the company exceeded forecasts.
The company is on track to achieve positive free cash flow in the second half of the year. Loop Capital expressed confidence in SentinelOne's product-led growth strategy and execution. They noted, however, that it might take a few more quarters of solid performance to fully restore investor confidence. The recent appointment of a new chief revenue officer and the continued expansion of products, including the upcoming launch of CNAPP and Purple AI, positions the company for further improvements in execution and consistency.
SentinelOne has diversified its business, with over a third of its revenue now coming from beyond its core endpoint product. The introduction of an enterprise bundle targeting large enterprises and the upper mid-market, along with a strong Managed Security Service Provider (MSSP) business, has contributed to its performance.
Despite trading at a discount compared to its hyper-growth peers, Loop Capital believes SentinelOne's stock price reflects the current risks and the path to regaining investor trust following a disappointing first quarter last year.
Loop Capital's revised price target of $30 reflects a higher sales multiple, while SentinelOne's shares were observed trading at $24.50 after hours. The firm suggests that SentinelOne's highly regarded technology assets could also make it an attractive acquisition target in the cybersecurity market.
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