SentinelOne's Profitability And Growth Trajectory Less Promising Than Competitors: Analyst

SentinelOne, Inc. S shares are trading lower on Thursday after its disappointing post-market Q1 earnings release the previous day.

The cybersecurity company reported revenue of $229.03 million, beating the consensus estimate of $228.35 million. Adjusted earnings of two cents per share were in line with analyst estimates.

The company lowered its full-year 2026 revenue guidance from $1.007 billion to a range of $996 million to $1.001 billion. Analysts were expecting full-year revenue of $1.01 billion.

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Multiple analysts downgraded/revised the price forecast for the stock.

B of A Securities analyst Tal Liani downgraded the company from Buy to Neutral, cutting the price forecast from $24 to $21.

The analyst writes that the endpoint security market remains appealing but has three main concerns.

SentinelOne’s results have been uninspiring for several quarters now, marked by two consecutive quarters of reduced guidance, says Liani in an analyst note.

The analyst writes that they previously viewed the guidance cut as a result of the new CFO resetting expectations but now see deteriorating business trends.

The analyst raises concerns about SentinelOne’s growth rate relative to its size and profitability compared to competitors like CrowdStrike. Despite similar growth rates, it operates from an 80% smaller revenue base and carries approximately 650 basis points lower profitability when adjusted for scale.

The analyst also highlights that the stock’s performance has lagged significantly, underperforming the NASDAQ by 1000 basis points year-to-date and 1860 basis points over the past 12 months.

Liani anticipates challenges in meaningfully improving margins to persist, with the company focusing on smaller customers and MSPs.

Goldman Sachs analyst Gabriela Borges revised the price forecast from $23.50 to $21.50 while maintaining a Neutral rating.

The analyst writes that she believes SentinelOne is experiencing more varied business trends for two main reasons.

First, their growth strategy relies heavily on acquiring new customers, where deal activity has slowed more significantly than existing clients. Second, they face persistent competitive pressure.

Borges says that while she maintains a positive view of SentinelOne’s core technology, this competitive environment, with vendors offering greater platform scale, remains an overhang.

The analyst revised the revenue estimates for FY26, FY27, and FY28 to $997 million (from $1.008 billion), $1.202 billion (from $1.227 billion), and $1.413 billion (from $1.459 billion), respectively, owing to intense competition and the challenge of balancing revenue growth with profitability.

Apart from this, several other analysts downgraded the stock, including:

• JP Morgan analyst Brian Essex downgraded the rating from Overweight to Neutral and lowered the price forecast from $22 to $19.
• Wells Fargo analyst Andrew Nowinski downgraded the stock from Overweight to Equal-Weight and lowered the price forecast from $22 to $18.

Price Action: S shares are trading lower by 11.0% to 417.50 at last check Thursday.

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