S - SentinelOne: Profitability Inflection Strongly Undervalued After Sell-Off

2024-03-18 00:54:31 ET

Summary

• SentinelOne is a next-gen cybersecurity vendor with high growth rate and significantly lower valuation compared to CrowdStrike and many other peer stocks, especially after the sell-off.
• Q4 revenue grew 38%, with guidance for 31% revenue growth in 2024. There are some indications guidance might be prudent and not indicative of a systematic slowdown.
• Notably, the company is primarily focused on achieving profitability by the end of the year, following substantial improvements in the last 2.5 years. This seems to limit near-term growth investments.
• Given the possible valuation floor (due to its undervaluation), the stock should grow roughly in line with the high revenue growth on the horizon, which could result in strong double-digit (CAGR) investor returns.

Investment Thesis

SentinelOne ( S ) is the latest of the next-gen cybersecurity vendors, with a best-of-breed portfolio and technology, trailing in the footsteps of CrowdStrike ( CRWD ). While it is smaller, is has a higher growth rate and significantly lower valuation as well....

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