3 Reasons Why SentinelOne (S) Stock Was Downgraded at Barclays Today

Barclays analyst Saket Kalia downgraded SentinelOne (NYSE: S) shares to Equal Weight from Overweight amid profitability concerns. The price target of $37.00 remains unchanged.

The three key reasons behind the S stock downgrade are:

1. Corporate endpoint market remains big and can support multiple disruptors;
2. S faces more competition at this scale than CrowdStrike (NASDAQ: CRWD) did when it was at similar scale; and
3. Profitability is still 2+ years out.

On point no.2, Kalia further noted:

“SentinelOne has been growing ARR >100% on an organic basis and we think the company will continue at a trajectory greater than 50% for next several years. However its trajectory may not follow in step with CRWD given a more competitive environment (i.e. there was no CRWD when CRWD was in its hyperbolic growth stage),” the analyst said in a client note.

Back to the profitability concerns, the analyst urges investors to own “companies whose valuations can be tied to profitability more near term.”

“This part of the call is more positioning driven, as we think names with profitability to anchor valuation will be more defensive,” the analyst concluded.

SentinelOne stock price is down 1.1% in pre-open.

By Senad Karaahmetovic

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