We came across a bullish thesis on SentinelOne, Inc. (NYSE:S) on Substack by Deep Value Returns. In this article, we will summarize the bulls’ thesis on S. SentinelOne, Inc. (NYSE:S)’s share was trading at $22.57 as of Jan 2nd. S’s forward P/E was 140.85 according to Yahoo Finance.
An engineer typing on a computer, developing the latest cybersecurity application.
SentinelOne is a prominent player in the cybersecurity industry, and despite recent setbacks, the company is poised for a potential turnaround. Although it has faced challenges, including underperforming relative to its competitors like CrowdStrike and Palo Alto Networks, there is strong reason to believe in its future growth. The company has shown resilience, and with a revised outlook expected in the coming quarters, it could position itself as one of the top cybersecurity firms going forward.
SentinelOne is experiencing growth in its core cybersecurity services, with projected year-over-year revenue growth exceeding 30%. This positions the company to attract investor attention, especially as it looks to revise its Q4 2025 guidance upwards. This growth trajectory puts SentinelOne in competition with established leaders in the cybersecurity space, like CrowdStrike, which despite a temporary IT outage, has maintained a loyal customer base. While some customers may have moved to other providers due to this event, CrowdStrike’s trust with clients remains strong, which highlights the competitive environment in which SentinelOne operates.
Looking ahead, one of the key factors that will likely drive investor confidence in SentinelOne is its path toward profitability. The company is expected to generate over $100 million in forward free cash flow starting in fiscal 2026, beginning in February 2025. This shift toward profitability, combined with its strong cash position and debt-free balance sheet, could lead to a reevaluation of the company’s value by the market. Investors may begin to recognize the long-term potential of SentinelOne once its ability to generate sustainable profits becomes clearer.
Furthermore, with a growing cash reserve and no debt, the company is in a strong position to weather any short-term challenges. This financial stability, combined with expected strong revenue growth, could lead to a re-rating of its stock, aligning its market value with its true growth potential. As a result, the stock could see a significant upside, potentially reaching $40 per share by summer 2025. SentinelOne’s potential for long-term success, driven by its profitability and strong market position, makes it an appealing investment opportunity in the cybersecurity sector.
SentinelOne, Inc. (NYSE:S) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held S at the end of the third quarter which was 37 in the previous quarter. While we acknowledge the risk and potential of S as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than S but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article was originally published at Insider Monkey.