SentinelOne Shares Set For Recovery, Analyst Predicts Long-Term Share Gains

Shares of SentinelOne Inc (NYSE: S) had tanked more than 12% on June 2, after the company reported disastrous results for the first quarter. The stock has been in focus on news of a class action lawsuit being filed.

Despite the recent disappointments, the market seems to be “mispricing the inherent value of SentinelOne as a long-term share gainer” and prospects of significant margin upside, according to Morgan Stanley.

The SentinelOne Analyst: Hamza Fodderwala upgraded the rating for SentinelOne from Equal-Weight to Overweight, while raising the price target from $15 to $20.

The SentinelOne Thesis: The stock is trading at a discount of around 50% to peers, which does not reflect the company’s intrinsic value, Fodderwala said in the upgrade note.

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“Our checks continue to suggest growing share gain for SentinelOne,” the analyst wrote. “With just 3% market share, we see a long runway of sustained 20%+ topline growth,” he added.

“With topline forecasts now appropriately derisked, we see a clear catalyst path to value accretion from more consistent beat/raise cadence and stronger cost discipline driving positive FCF next year,” Fodderwala stated. Potential margin expansion can come from “cloud cost optimization, channel partner leverage and higher interest income,” he added.

S Price Action: Shares of SentinelOne had risen by 7.3% to $15.62 at the time of publishing Monday.

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