SentinelOne Stock Expands Into Broader Threat Detection | #microsoft | #hacking | #cybersecurity | #education | #technology | #infosec


Sentinelone Inc Cl A
Sentinelone Inc Cl A





IBD Stock Analysis

  • After an initial runup, shares have fallen back to their IPO base
  • Stock not buyable now, but shares may be setting up for a move
  • Composite Rating is middling 58, but Relative Strength Rating is 91

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SentinelOne (S) is less known to investors than, say, its bigger rival CrowdStrike Holdings (CRWD). But SentinelOne stock, the IBD Stock of the Day, has the same roots in the endpoint security market.


It also uses artificial intelligence in its security software to detect malware on laptops, mobile phones and other “endpoints” that access corporate networks.

And like CrowdStrike, Mountain View, Calif.-based SentinelOne is evolving as a company amid the ransomware epidemic. It’s building broad, threat-detection cybersecurity platforms.

Called XDR, or extended detection and response, the cybersecurity technology monitors and analyzes endpoints as well as web/email gateways, web application firewalls, cloud business workloads and information technology infrastructure. Further, XDR uses automated tools to gather network incident data, also called telemetry, to identify signals of malicious activity.

SentinelOne Stock Focuses On Threat Detection

SentinelOne’s initial public offering took place on June 30, with shares priced at 35. The SentinelOne IPO raised $1.2 billion, giving it ammunition for acquisitions that could expand its cybersecurity offerings.

SentinelOne stock hit a record high 73.47 on Sept. 7, then pulled back to form its IPO base. SentinelOne stock is not yet in a buy zone though it could be setting up again. But investors should wait to see if it forms a handle that would provide an entry point. Barring a handle, the buy point is 73.57. Shares closed Thursday up fractionally to 64.01.

Cowen analyst Shaul Eyal in a July initiation on SentinelOne stock said its IPO valuation was mainly tied to the endpoint market, not the bigger opportunity in XDR and ransomware.

“Both SentinelOne and CrowdStrike serve as prime examples for the XDR/EDR markets as they are direct competitors in this space,” he said. “We do not believe SentinelOne has fully baked in the potential of its targeted markets. SentinelOne’s XDR data opportunity hasn’t even scratched the surface yet as it wasn’t included in the disclosed TAM (total addressable market) projection.”

Ransomware Attacks Proliferate

Highly publicized ransomware incidents have involved SolarWinds (SWI), Colonial Pipeline, meat producer JBS, and Kaseya.

In ransomware attacks, hackers seize control of an organization’s computer system and data by installing malware. They lock up a victim’s computers with data-encrypting software.

SentinelOne isn’t the only cybersecurity firm pushing into XDR.

Along with CrowdStrike, Palo Alto Networks (PANW), Fortinet (FTNT) and Rapid7 (RPD) have a presence. So do startups such as Cybereason, Illumio, Exabeam and Recorded Future in the XDR market.

SentinelOne Stock: Taking Market Share From Incumbents

In the endpoint market, the rivals for SentinelOne stock include Microsoft (MSFT) and VMware‘s (VMW) Carbon Black unit.

“SentinelOne can drive revenue growth for the foreseeable future simply by continuing to take share from the legacy endpoint security providers (McAfee, Symantec/Broadcom, Trend Micro),” Wells Fargo analyst Andrew Nowinski said in a report to clients. “Its platform also stacks up well against other vendors that offer more of a next-generation platform, including VMware and Microsoft.”

While SentinelOne focuses on small- and medium-size businesses, it plans to push into the corporate market.

UBS analyst Roger Boyd in his note to clients said, “Growing emphasis on enterprise likely brings operational challenges, more competitive run-ins and longer sales cycles.”

SentinelOne Stock Not Turning Profits Yet

In addition, SentinelOne stock lost 20 cents a share in the July quarter, in line with Wall Street estimates. Revenue rose 121% to $45.8 million, topping estimates of $40.4 million.

Further, annual recurring revenue increased 127% to $198 million, including the acquisition of Scalyr, the company said. Analysts had estimated ARR of $186.4 million.

For the October quarter, SentinelOne projected revenue of $49.5 million at the midpoint of its guidance. Analysts had estimated revenue of $45.7 million.

Cybersecurity stocks belong to the IBD Computer-Software Security group. Further, it ranks No. 9 out of 197 industry groups tracked.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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