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On Thursday, prominent financial firm Bernstein raised its price target. sentinel one Inc (NYNYSE:E:S) rose to $37.00 from the previous price of $34.00. The company continues to back the stock with an Outperform rating. This adjustment reflects analysts' confidence in the company's near-term earnings growth and future financial performance.
SentinelOne has shown resilience with negligible customer churn, and the company expects the demand environment to further improve as macroeconomic headwinds to renewals are now subsiding. The analyst expects the company's net retention rate (NRR) to stabilize soon, and expects it to recover around 300-400 basis points by the end of 2025.
The company's growth strategy includes significant upsell and cross-sell opportunities to existing customers. This approach, combined with steady new customer acquisition, is expected to sustain revenue growth in the mid-high 30% through FY2027. Expected revenue increases may increase financial leverage and free cash flow (FCF). ) By the same time his profit margin was approaching 20%.
Bernstein's valuation model employs a combination of multiple regression analysis and discounted cash flow (DCF) analysis to estimate 12x price (NTM) earnings over the next 12 months. DCF assumes terminal revenues of $5 billion and a growth rate of 3%. These calculations support his one-year price target revision of $37 for SentinelOne stock.
The company's outlook for SentinelOne is based on a combination of the company's strong operating metrics and favorable market conditions expected in the coming years.
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