In a report released today, Hamza Fodderwala from Morgan Stanley maintained a Hold rating on SentinelOne (S – Research Report), with a price target of $27.00.
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Hamza Fodderwala has given his Hold rating due to a combination of factors impacting SentinelOne’s market position and financial outlook. Despite some positive expectations for an increased adoption of additional products like Cloud Security and Purple AI, these are not anticipated to fully counterbalance the pricing pressures from competitors in the core endpoint security market. The competitive landscape remains tough, with larger platform players offering higher discounts, which may constrain SentinelOne’s ability to gain market share.
Additionally, profitability concerns arise from elevated cloud hosting costs and increased investment efforts, which could lead to a decline in gross margins. The forecasted EBIT margin for Fiscal Year 2026 is expected to be flat compared to Fiscal Year 2025, which is a concern given the decelerating growth trends. Thus, despite the stock’s valuation appearing attractive relative to peers, the combination of declining margins and growth challenges contribute to maintaining a Hold rating.