DA Davidson reiterated its neutral rating and $20 price target on cybersecurity firm SentinelOne Inc (NYSE: S) following the company’s second-quarter fiscal 2027 results, which exceeded revenue and net new annual recurring revenue (ARR) estimates.
The analyst cited concerns over the sustainability of ARR growth despite the company reporting total revenue of $292 million, up 21% year-over-year and surpassing the $290.2 million consensus. Net new ARR reached $56 million, marking the fifth consecutive quarter of outperformance against consensus estimates. Shares have gained 73% over the past six months and 51% year-to-date, trading at $21.10 at the time of the report.
DA Davidson’s $20 price target implies a valuation of roughly 30 times enterprise value relative to projected fiscal 2028 free cash flow, a premium to software-as-a-service peers trading at mid-teens multiples on the same metric. The firm’s neutral stance reflects expectations that SentinelOne’s stock will remain range-bound until ARR growth stabilizes.
Other analysts have taken a more bullish view. Scotiabank raised its target to $26 from $23.50, while Canaccord lifted its estimate to $25 from $18 and UBS increased its price target to $24 from $16. Cantor Fitzgerald maintained a $26 target, and Citizens adjusted its estimate to $25 from $23.
SentinelOne’s Q2 results followed a period of elevated guidance after prior revenue misses, signaling improved operational execution. However, DA Davidson’s neutral rating underscores lingering doubts about the durability of ARR expansion amid a broader slowdown in new customer commitments.
