Wells Fargo Downgrades SentinelOne As Management Warns of ARR Slowdown

On May 28, Wells Fargo downgraded SentinelOne, Inc. (NYSE:S) shares to an ‘Equal Weight’ from an ‘Overweight.’ It also cut the stock’s price target to $18 from $22. The downgrade and price cut underscore a significant shift in expectations for the cybersecurity provider.

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The downgrade follows management issuing full-year guidance that indicates annual recurring revenue is likely to decline 16% year-over-year. The expected 16% ARR decline would signal a significant slowdown, given the company has delivered a 32.25% revenue growth over the past 12 months. While the company’s performance in May showed substantial recovery, the momentum is fading, and consequently, the expected ARR declines.

Wells Fargo also downgraded SentinelOne in response to the company’s lackluster performance. Despite favorable conditions, including easy comparison, its growth has failed to meet expectations. The downgrade is also in response to the company’s disappointing first-quarter results that raised concerns about underlying growth. First quarter earnings missed expectations, raising concerns about SentinelOne’s ability to achieve strong net new annual recurring revenue growth.

SentinelOne is a technology company that develops and provides an AI-powered platform for endpoint protection, cloud security, and identity security. Its platform leverages behavioral AI to prevent, detect, and respond to cyber threats, offering real-time protection and automated response.

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Disclosure: None.