On Thursday, Needham adjusted its price target for Tenable Holdings Inc . (NASDAQ:TENB) shares, a cybersecurity company, reducing it to $50 from the previous $62, while keeping a Buy rating on the stock.
The change follows Tenable's second quarter of the calendar year 2024 (2QCY24) earnings report, which revealed calculated billings of $221.1 million.
This figure represents a 10% year-over-year growth but fell short of both internal management expectations and the sell-side forecast of $225.5 million.
The company attributed the shortfall to a challenging sales environment, especially in North America, where there was increased scrutiny of larger deals.
Furthermore, Tenable noted a shift in the vulnerability management (VM) market, suggesting that organizations are now adjusting their spending on multi-year contracts.
This change is believed to be a result of the diminishing impact of the COVID-19 pandemic and the receding urgency from previous catalysts such as the Log4j vulnerability.
In light of these developments, Tenable's management has revised its full-year 2024 calculated current billings (CCB) guidance downward by approximately $28 million, which represents a 3% decrease at the midpoint.
This adjustment comes after an increase in the guidance by $4 million in the previous quarter. Despite these revised growth expectations, Tenable has increased its guidance for full-year 2024 unlevered free cash flow (uFCF).
The company also provided preliminary commentary for the 2025 fiscal year, anticipating uFCF to be between $280 million and $290 million. This projection implies an enterprise value to free cash flow (EV/FCF) multiple of around 17 times.
The update from Needham reflects the latest financial results and guidance provided by Tenable, as the company navigates a changing market landscape and modifies its growth strategy accordingly.
In other recent news, Tenable Holdings Inc., a cybersecurity company, has seen several adjustments to its price target by investment firms Needham, Piper Sandler, and Canaccord Genuity. Needham reduced its price target to $50, while Piper Sandler and Canaccord Genuity lowered theirs to $55 and $53, respectively.
These changes come in the wake of 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.
The company's management attributed this shortfall to a challenging sales environment, particularly in North America, and a shift in the vulnerability management (VM) market.
Despite these challenges, Tenable's strategic products, such as Tenable One and its cloud offerings, continue to show positive momentum. The company also provided preliminary commentary for the 2025 fiscal year, anticipating unlevered free cash flow (uFCF) to be between $280 million and $290 million.
In addition, Tenable's Q2 2024 revenue reached $221.2 million, a 13% increase year-over-year, with recurring revenue accounting for 96% of the total. Income from operations was reported at $42.8 million, exceeding the guided range by $7.8 million. These are among the recent developments for Tenable.
InvestingPro Insights
Following the recent adjustments in Tenable Holdings Inc.'s (NASDAQ:TENB) financial outlook and Needham's updated price target, an analysis of InvestingPro data and insights can provide additional context for investors. Tenable's market capitalization stands at approximately $5.46 billion, indicating a significant presence in the cybersecurity sector. Despite challenges in sales and billings, the company boasts a robust gross profit margin of 77.36% over the last twelve months as of Q1 2024, underscoring the efficiency of its operations.
InvestingPro Tips highlight that analysts expect net income growth this year, which, coupled with an impressive gross profit margin, could signal potential resilience amidst the current market dynamics. Moreover, while the company does not pay dividends, suggesting a reinvestment strategy for growth, it is worth noting that Tenable is trading at a high Price/Book multiple of 15.21, which may warrant careful consideration of its valuation by potential investors.
For those seeking a deeper dive into Tenable's financial health and future prospects, InvestingPro offers additional insights. There are 16 more InvestingPro Tips available on their platform, including further analysis on earnings revisions and profitability predictions for the year. These detailed tips can be accessed at https://www.investing.com/pro/TENB, providing investors with a comprehensive tool to inform their investment decisions.
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