SentinelOne shares target raised to $31 on strong outlook

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SentinelOne shares target raised to $31 on strong outlook

On Tuesday, Needham, a well-regarded investment firm, increased its share price target for SentinelOne Inc (NYNYSE: S E:S) to $31 from the previous target of $28, while reiterating a Buy rating for the cybersecurity company's stock. The adjustment reflects the firm's anticipation of a robust performance and guidance from SentinelOne, based on several key factors that are expected to drive growth.

The firm's confidence in SentinelOne is rooted in the current stabilization of macroeconomic conditions and consistent expenditures in security, which are seen as beneficial for the company. Additionally, trends favoring platform consolidation, coupled with vigorous growth in endpoint security and related products, are likely to contribute positively to SentinelOne's performance.

SentinelOne's upcoming Purple AI product, which is slated for general availability in the first quarter of FY25, is also a focal point of investor interest. Details regarding pricing and the enterprise pipeline for this product are particularly anticipated.

The firm notes that SentinelOne's suite of solutions, which includes cloud security, data security (SIEM), and identity protection, are all experiencing near-triple-digit growth rates. These solutions are expected to be key drivers of incremental growth going into FY25.

In terms of valuation, SentinelOne's shares are currently perceived as relatively inexpensive, trading at 9.6 times enterprise value to sales (EV/S) and at a growth-adjusted multiple of 0.32 based on the firm's calendar year 2024 estimates. This valuation is considered to be at a discount when compared to SentinelOne's peers in the security sector.

The investment firm also suggests that SentinelOne is likely to exceed expectations modestly, as the company continues to improve operational efficiencies and strengthen its momentum with channel partners, particularly with Managed Security Service Providers (MSSPs).

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