SentinelOne's disappointing forecast slams shares

FILE PHOTO: The logo for SentinelOne Inc, a cybersecurity firm, is displayed on a screen during the company’s IPO at the New York Stock Exchange (NYSE) in New York City, U.S., June 30, 2021. REUTERS/Brendan McDermid

(Reuters) -Cybersecurity firm SentinelOne Inc was set to shed over a third of its market value on Friday after a tough economy and stiff competition slammed its quarterly earnings and forecast.

Shares of the company sank 35% in early trading on Friday and the stock could erase most of the 42% rise it has posted so far this year, if losses hold through regular trading.

More than half of the 30 analysts covering the stock lowered their target prices, citing the longer deal cycles and waning demand from enterprise customers, who are holding back on new orders due to high inflation and rising interest rates.

The median price target on the stock is now $18, which is 13% lower than its last closing price. The company trades at more than 14 times its 12-month forward sales estimates, pricier than sector bellwether Palo Alto Networks Inc's price to sales ratio of 12.05.

Factors other than a weak economy seem to be impacting SentinelOne, said BTIG analysts, downgrading the stock to "neutral".

"Given the degree of the Q1 miss after the company initially guided in mid-March and the magnitude of the guide down, it simply feels like something else is at play here," they said.

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

Some brokerages pointed to competitive pressure from the likes of Microsoft Corp and larger peer CrowdStrike Holdings Inc .

Guggenheim analysts, meanwhile, said the company's forecasts do not completely reflect an economic drop, and that "it is hard to have any confidence in forecasts at this point".

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

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