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SentinelOne (NYSE:S) may be worth $26 a share in a potential takeover amid reports that the cyber security firm is exploring a sale.
A “reasonable hypothetical upside case could be $26 based on a 9.0x EV/revenue applied to our CY24E revenue as supported by both public company comparables and a set of recent comparable transactions,” JMP Securities analyst Trevor Walsh, who has a market outperform rating and a $22 price target on SentinelOne (S) wrote in a note on Monday.
The analysis comes after a Reuters report a week ago that SentinelOne (S) hired investment bank Qatalyst Partners to advise on talks with potential buyers, including private equity shops. On Friday, Bloomberg reported that Wiz, a cybersecurity startup most recently valued at some $10 billion, was said to be weighing a bid for SentinelOne.
Potential strategic buyers include Google (GOOGL), Cisco (CSCO), Palo Alto Networks (PANW), and Wiz, according to Walsh. Private equity firms that could be interested include Thoma Bravo and Franciso Partners, two firms that have been active acquirers in public cybersecurity.
JMP’s Walsh highlighted that historical cybersecurity M&A transactions have done around 9x enterprise value/revenue. Sentinelone (S) currently trades at a multiple of 5.5x, and a “very reasonable” upside case at 9x implies a stock price of $26, with publicly traded cyber comps trading at 8.8x on average.
Separately, Wedbush analyst Taz Koujalgi said that SentinelOne could see $21 a share in a potential takeout, according to a note on Monday. Valuations have gone down in the last two years, and acquisitions without free cash flow support get valued at a discount in deals.
