SentinelOne falls as Wells Fargo downgrades on worries over 'declining' demand
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SentinelOne (NYSE:S) shares fell nearly 5% in premarket trading on Tuesday as investment firm Wells Fargo downgraded the cybersecurity company on worries over "declining" demand and recent executive turnover.
Analyst Andrew Nowinski lowered his rating on SentinelOne (S) shares to equal weight from overweight, noting that worries over the slowing demand and changes in leadership will make it "more difficult to reach material profitability."
"Our checks with resellers downticked in [fourth-quarter], with 43% of resellers reporting Below Plan results, and just 10% Above Plan (-33% net vs -13% net last quarter)," Nowinksi wrote in a note to clients. He added that the four largest resellers of SentinelOne (S) all had "relatively weak results" and three of the four had below plan results. 
Separately, Nowinksi noted that CrowdStrike (CRWD) had more positive checks and looks to have "better momentum in the market."
Nowinksi also noted that channel partners said the departures of Daniel Bernard and Raj Rajamani to go to CrowdStrike (CRWD) is "concerning," especially since both are "highly regarded" in the industry.
As such, Nowinksi lowered his 2024 and 2025 estimates on SentinelOne (S).
Last week, hedge fund Third Point disclosed that it had reduced its stake in SentinelOne (S) during the fourth-quarter, while making several other changes to its portfolio.
Analysts are largely bullish on SentinelOne (S). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates S a HOLD.