DA Davidson reiterated a Neutral rating and $20 price target for SentinelOne Inc (NYSE: S) on Friday, citing concerns over decelerating net new annual recurring revenue (ARR) trends.
The firm, led by analyst Rudy Kessinger, maintained its valuation despite SentinelOne’s second-quarter fiscal 2027 results exceeding revenue and net new ARR expectations. Revenue reached $292.0 million for the quarter, surpassing the $290.2 million consensus estimate and rising 21% year-over-year. Net new ARR totaled $56 million, marking the fifth consecutive quarter of beating consensus estimates.
DA Davidson acknowledged the company’s recent performance but emphasized that ARR growth remains inconsistent. The firm expects SentinelOne’s stock to trade within a range until a sustainable floor for ARR growth is established. The $20 price target implies a valuation of roughly 30 times enterprise value to fiscal year 2028 free cash flow, above the mid-teens multiple observed among growth software-as-a-service peers trading near 20 times the same metric.
SentinelOne’s shares have surged 73% over the past six months and 51% year-to-date, according to InvestingPro data. The stock last traded at $21.10, slightly above DA Davidson’s target.
Several other analysts raised price targets following the results. Cantor Fitzgerald maintained an Overweight rating with a $26 target, while Scotiabank increased its target to $26 from $23.50. Canaccord raised its target to $25 from $18, UBS to $24 from $16, and Citizens adjusted its target to $25 from $23. Analysts at these firms highlighted revenue beats, operating margin expansion, and ARR growth as key drivers of their upward revisions.
The mixed outlook reflects a divergence between SentinelOne’s strong top-line performance and lingering investor uncertainty over ARR sustainability.
