On Wednesday, Tenable Holdings, Inc. (NASDAQ:TENB), a cybersecurity company, received a new stock coverage from Jefferies with a Hold rating and a price target set at $45.00. The firm recognizes Tenable as a leader in the Vulnerability Management (VM) sector, with a substantial customer base of over 44,000 which presents significant opportunities as the company broadens its product range, including cloud, operational technology (OT), and identity security solutions.
Tenable's unified platform, Tenable One, is seen as a potential driver for the company to balance the cyclical nature and potential moderation of its core VM revenue by packaging additional services. Despite the company's strong position, the analyst notes that Tenable is still in the early phases of expanding beyond its core vulnerability management offerings, which currently account for an estimated 70% of its business.
The report projects a three-year revenue compound annual growth rate (CAGR) of 10.5% from 2023 to 2026 for Tenable. This forecast is based on the company's current trajectory and market position. The price target of $45.00 reflects the analyst's assessment of the stock's fair value considering the company's revenue prospects and market expansion efforts.
The coverage initiation comes as Tenable continues to navigate the evolving cybersecurity landscape, aiming to leverage its established VM capabilities while transitioning towards a more diversified security platform. The company's focus on expanding its product offerings is part of a broader strategy to meet the growing demand for comprehensive cybersecurity solutions.
In other recent news, Tenable, the cybersecurity company, has experienced several adjustments in its share price target following the release of its recent earnings report. Needham maintained its Buy rating but reduced its price target to $50, citing growth and net expansion rates. Scotiabank also adjusted its target to $44, noting a slowdown in the company's core business demand. Notably, Tenable's Q2 2024 revenue reached $221.2 million, a 13% increase year-over-year, with recurring revenue making up 96% of the total.
In the wake of these developments, Piper Sandler lowered its price target from $60 to $55, maintaining an Overweight rating. The firm noted Tenable's strategic products, such as Tenable One and its cloud offerings, continue to gain traction despite a challenging sales environment. Canaccord Genuity also reduced its price target from $57 to $53, maintaining a Buy rating, highlighting the company's improved profitability outlook and the potential growth opportunities in its platform expansion.
These adjustments come after Tenable's recent earnings report, which revealed a 10% year-over-year growth in calculated billings of $221.1 million, but fell short of both internal management expectations and the sell-side forecast of $225.5 million. Despite these challenges, Tenable's strategic products continue to show positive momentum. The company also provided preliminary commentary for the 2025 fiscal year, anticipating unlevered free cash flow to be between $280 million and $290 million.
InvestingPro Insights
Tenable Holdings, Inc. (NASDAQ:TENB) presents a mixed financial picture that aligns with Jefferies' Hold rating. According to InvestingPro data, the company's revenue for the last twelve months as of Q2 2023 stood at $852.04 million, with a growth rate of 14.62%. This growth rate is slightly higher than the 10.5% CAGR projected by Jefferies for 2023-2026, suggesting the company is currently outperforming long-term expectations.
Tenable's gross profit margin of 77.43% is notably strong, reflecting the company's efficiency in its core operations. This aligns with one of the InvestingPro Tips, which highlights Tenable's "impressive gross profit margins." This robust margin could provide the company with financial flexibility as it expands its product offerings beyond vulnerability management.
Another relevant InvestingPro Tip indicates that "12 analysts have revised their earnings upwards for the upcoming period." This positive sentiment from analysts could be related to Tenable's expansion efforts and the potential of its Tenable One platform, as mentioned in the article.
It's worth noting that Tenable is currently trading at a high Price / Book multiple of 13.94, which may suggest that the market has already priced in some of the company's growth potential. This valuation metric aligns with Jefferies' cautious Hold rating and $45 price target.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights on Tenable Holdings, Inc. There are 5 more InvestingPro Tips available for TENB, which could provide further context for the company's financial health and market position.
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