Amid a soft day for the major equity indices, endpoint security software provider SentinelOne (NYSE:S) conspicuously gained more than 1% during the midweek session. The company posted financial results for its third-quarter earnings report that beat Wall Street’s expectations. As well, S stock benefits from broader fundamental relevancies.
Spearheading the news cycle was SentinelOne’s fiscal disclosure for the three months ended Oct. 31, 2022. Though the cybersecurity firm posted an earnings loss (adjusted for non-recurring items) of 16 cents per share, it beat analysts’ consensus expectations for a loss of 22 cents. In the year-ago quarter, the company posted a loss of 15 cents per share.
Per Zacks Equity Research, the latest performance represented an earnings surprise of 27.3%. Over the last four quarters, SentinelOne surpassed consensus earnings estimates all four times.
On the top line, the cybersecurity enterprise generated revenue of $115.3 million. This beat the Street’s consensus view by 3.9%. Further, in the year-ago quarter, SentinelOne produced sales of just over $56 million. Likewise to earnings, the company beat revenue estimates four times over the last four quarters.
Also, while some analysts adjusted down their price targets for S stock, they reiterated their “buy” ratings. For instance, BofA Securities adjusted its price target to $28 from $35 while maintaining an overall bullish outlook.
Similarly, UBS anticipates S stock reaching $25 (adjusted down from prior expectations of $39). It too maintained a “buy” rating. Per TipRanks, SentinelOne enjoys a “moderate buy” consensus view based off 12 “buy” ratings, five “hold” ratings and zero “sell” ratings.
S Stock May Have a Cynically Bright Future
Beyond just the earnings print itself, S stock benefits from two fundamental dynamics. First, the broader software sphere appears to finally be regaining momentum. Second, the new normal presents a cynically positive outlook for SentinelOne.
Regarding the former talking point, the software industry represents a surprisingly robust category this earnings season. Recently, GitLab (NASDAQ:GTLB) posted a strong showing for Q3. In addition, management added Q4 forecasted metrics that beat analysts’ consensus expectations.
As well, Workday (NASDAQ:WDAY) and UiPath (NYSE:PATH) both delivered impressive Q3 results, injecting confidence in the beaten-down sector. Natively, S stock may benefit from the rising tide thesis.
However, SentinelOne may have an edge over many other software rivals due to the underlying cybersecurity specialty. As reported by Forbes, in 2021, “the average number of cyberattacks and data breaches increased by 15.1% from the previous year.”
Moreover, the critical concern among experts is that as cybercriminals and belligerent nation-states increase in sophistication, free societies may suffer from additional attacks. In particular, vulnerabilities associated with social engineering and ransomware may embolden nefarious actors.
Unfortunately, the harsh reality is whenever financial incentives are involved, criminal activity will follow. Therefore, enterprises such as SentinelOne will likely enjoy an expanding addressable market, potentially boosting S stock.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.