By Elsa Ohlen

SentinelOne stock plummeted on Thursday as the market digests its lowered annual guidance. It was the latest disappointment for the cybersecurity sector as economic concerns look to be causing customer hesitation.

SentinelOne stock was down 13% to $17.15 in premarket trading on Thursday.

The downward move contrasted starkly with futures tracking the Nasdaq 100 which were rallying 2% following strong earnings from leading chip maker Nvidia and a federal trade court striking down President Donald Trump's so-called reciprocal tariffs late Wednesday.

The report shows a continuing trend of softer results from cybersecurity peers, KeyBanc analysts led by Eric Heath said. Uncertain macroeconomic conditions are causing deals to be pushed to the future, according to Heath, who rates the stock Sector Weight without a price target.

Jefferies analyst Joseph Gallo said SentinelOne appears to have been affected more than peers such as Palo Alto Networks, potentially due to a higher proportion of new customers. He has a Buy rating and $23 target price on SentinelOne stock.

D.A. Davidson analysts led by Rudy Kessinger maintained a Neutral rating on SentinelOne shares following the earnings report, noting the lowered guidance. Kessinger lowered his price target on the stock to $17 from $18.

In a call with investors late Wednesday, CEO Tomer Weingarten said SentinelOne saw improved trends in May, expecting growth in the second fiscal quarter to be better compared with the first quarter. "This was mostly isolated to kind of a [first quarter] dynamic," he said, referring to the decline in deals during the period.

Cybersecurity peers Fortinet and Palo Alto Networks also disappointed with their respective earnings earlier this year, sending shares down across the sector. Zscaler is set to report earnings Thursday after the bell while CrowdStrike's next set of results is due on June 3.

SentinelOne lowered its full-year 2026 annual recurring revenue guidance to a range between $996 million and $1.001 billion, down from between $1.007 billion and $1.012 billion previously.

SentinelOne's per-share loss for the quarter ended April 30 came in at 63 cents, compared with a loss of 23 cents in the same quarter a year ago and far below the 24 cents per-share loss expected by analysts, according to FactSet. On an adjusted basis, the company earned 2 cents a share.

Revenue came in at $229 million, largely in line with expectations. Annual recurring revenue was $948 million, slightly below expectations of $952 million.

Coming into Thursday trading, the stock was down 11% so far this year and currently trades with a forward price to earnings ratio of 81.9, a higher valuation than Fortinet, Palo Alto and Zscaler, but lower than CrowdStrike. The average forward earnings ratio for Nasdaq-listed companies is 26.7.

Write to Elsa Ohlen at elsa.ohlen@barrons.com

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May 29, 2025 08:18 ET (12:18 GMT)

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