On Monday, Baird initiated coverage on shares of Tenable (NASDAQ:TENB), a cybersecurity company, with an Outperform rating and a price target of $55.00.
The firm highlighted Tenable's potential for upside amidst modest growth expectations, favorable market dynamics, and strategic expansion into federal and operational technology (OT) markets.
The coverage notes Tenable's efforts to diversify its revenue streams and the rollout of Tenable One, which broadens the company's footprint in cloud security, identity management, and OT. This move is expected to enhance Tenable's exposure management platform. Tenable has been recognized for its strong position in Vulnerability Management, a status bolstered by competitive wins and an increase in accounts with annual contract values (ACV) over $100,000, which are driving the company's solid revenue and billings growth.
Baird's outlook for Tenable is optimistic, citing effective upselling and cross-selling strategies that leverage its large customer base. The firm believes these strategies position Tenable well for continued margin expansion and profitable growth. The new price target represents confidence in the company's future performance and its strategic initiatives in the cybersecurity landscape.
In other recent news, cybersecurity company Tenable Holdings (NASDAQ:TENB) Inc. delivered strong first-quarter results, surpassing expectations with a 14% year-over-year revenue increase, reaching $216 million. The company's product, Tenable One, played a significant role in this growth, constituting 26% of new enterprise sales. Tenable also showcased strong financial health with $54.7 million in unlevered free cash flow and a substantial reserve of $510.8 million in cash and short-term investments.
Following the results, an analyst at DA Davidson adjusted the price target for Tenable to $56.00 from the previous $61.00 while retaining a Buy rating on the stock. The cybersecurity firm's guidance for the calendar year 2024 has been slightly increased for both revenue and Calculated Current Billings (CCB), now suggesting an 11-12% year-over-year organic CCB growth compared to the previously estimated 10-12%.
Tenable anticipates growth acceleration in the second half of the year, driven by product integration and pipeline opportunities. The company is bullish on the federal sector and sees growing opportunities in the operational technology (OT) security market. Additionally, Tenable plans to enhance its platform with AI capabilities, offering enriched asset information and an AI Chatbot feature for expert advice.
InvestingPro Insights
As Baird initiates coverage on Tenable with a promising outlook, real-time data from InvestingPro adds depth to the analysis. Tenable's market capitalization stands at a robust $5.12 billion, reflecting the company's significant presence in the cybersecurity industry. The firm's gross profit margin impressively reaches 77.36% for the last twelve months as of Q1 2024, underscoring its efficiency and potential for profitability. Despite not being profitable over the last twelve months, analysts forecast a shift towards profitability this year, which aligns with Baird's optimistic assessment.
InvestingPro Tips highlight Tenable's impressive gross profit margins and the expectation for net income growth this year, which could be a catalyst for the stock's future performance. Additionally, Tenable operates with a moderate level of debt, suggesting a balanced approach to leveraging and financial risk. It's worth noting, however, that 16 analysts have revised their earnings downwards for the upcoming period, indicating potential challenges ahead. For investors interested in a deeper dive into Tenable's prospects, there are additional InvestingPro Tips available, offering nuanced insights into the company's financial health and market potential. To access these tips and more, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at InvestingPro.
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