SentinelOne’s disappointing forecast sends stocks tumbling

(Reuters) – Cybersecurity firm SentinelOne Inc was expected to lose more than a third of its market value on Friday after a tough economy and fierce competition dented its quarterly earnings and forecast.

Shares of the company fell 37% before the bell on Friday and were expected to open at their lowest level in about six months. The stock could wipe out most of the 42% rise it has posted so far this year, if the losses hold up through steady trading.

More than half of the 30 analysts covering the stock lowered their price targets, citing longer transaction cycles and lower demand from corporate clients, which are holding back new orders due to high inflation and rising rates. of interest.

The stock’s midpoint price target is now $18, 13% lower than its last closing price. The company is trading at more than 14 times its 12-month forward sales estimate, more expensive than Palo Alto Networks Inc.’s price-to-sales ratio of 12.05.

Factors other than a weak economy appear to be impacting SentinelOne, BTIG analysts said, downgrading the stock to “neutral.”

“Given the degree of failure of the first quarter after the company was initially guided in mid-March and the magnitude of the downward guide, it just feels like something else is at play. here,” they said.

SentinelOne reported quarterly revenue growth of about 70% on Thursday, its weakest since its IPO, and predicted a slower 38% increase in the second quarter. Both figures missed the estimates.

Some brokerages pointed to competitive pressure from Microsoft Corp and its larger counterpart CrowdStrike Holdings Inc.

Guggenheim analysts, meanwhile, said the company’s forecast did not fully reflect an economic downturn and that “it is difficult to be confident in the forecast at this stage.”

(Reporting by Akash Sriram in Bengaluru; Editing by Pooja Desai)

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