Wall Street divided on SentinelOne after workforce cut clouds earnings beat

Investing.com -- SentinelOne drew mixed reactions from Wall Street after its fiscal first-quarter results, with Raymond James cutting the cybersecurity company to Market Perform while Bank of America upgraded it to Buy.

The split that reflects disagreement about whether the company's underlying momentum can offset execution concerns.

SentinelOne shares are down around 14% premarket after reporting its latest quarterly earnings following Thursday’s close.

Raymond James analyst Adam Tindle said he was stepping back after years of defending the stock, citing first-quarter revenue that came in below the midpoint of guidance, working capital metrics pointing to another back-end weighted quarter, and a surprise announcement of an 8% workforce reduction.

The restructuring was particularly puzzling, Tindle wrote, given that EBIT beat guidance by twice the expected amount and contribution margins remained healthy at 30%.

He said he "would not fight investors with duration that are willing to wait this out" but flagged the risk that maintaining full-year guidance while cutting headcount and reorganizing go-to-market teams could set up a repeat of past disappointments, especially with a new CFO delivering her first official guidance this quarter.

Bank of America analyst Tal Liani took the opposite view, upgrading the stock to Buy and raising his price target to $20 from $16.

He views "the -18% after-hours decline as an attractive entry point," pointing to revenue growth of 21% year-over-year, record net new ARR of $44 million, up 57%, and non-endpoint solutions now representing half of total mix. He also noted operating margins of 4%, double Street estimates, with a path to 10% in fiscal 2027.

Liani framed the conservative guidance as a prudent posture under new management rather than a signal of deteriorating demand.

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