Needham has reaffirmed its Buy rating on shares of Tenable (NASDAQ: TENB), along with a steady price target of $50.00. The firm's analysts expressed a cautious stance based on the cybersecurity company's growth and net expansion rates.
The position comes after a detailed analysis of Tenable's projected growth in comparison to the consensus forecast for the company's Calculated Current Billings (CCB) in Calendar Year 2025 (CY25).
The sell-side model predicts Tenable will achieve $1,075.6 million in CY25 CCB, which would mark a reacceleration to 12% year-over-year growth from the 9% CCB growth anticipated at the end of Calendar Year 2024 (CY24). The growth is expected to include a roughly 2-point boost from inorganic contributions, particularly from the integration of cloud security company Ermetic.
The firm also highlighted Tenable's performance in the Public Sector, noting the company's historical success with the US Federal Government in vulnerability management (VM), and its growing presence in other areas such as operational technology (OT) and identity security. Seasonal strength in the third quarter is typically observed due to the company's established traction with government contracts.
Additionally, management's strategic changes in the go-to-market approach were mentioned, which aim to balance the mix of perpetual licenses that spiked in the third quarter of Calendar Year 2023 (3QCY23). These adjustments are expected to improve the company's sales structure moving forward.
InvestingPro Insights
Following Needham's reaffirmation of a Buy rating for Tenable (NASDAQ:TENB), InvestingPro data provides further context to the company's financial health and market valuation. Tenable's market capitalization stands at approximately $4.7 billion, underscoring its significant presence in the cybersecurity sector. Despite not being profitable over the last twelve months, analysts have revised their earnings upwards for the upcoming period, indicating a positive outlook on the company's ability to turn a profit this year. This aligns with the company's expected net income growth and the impressive gross profit margins of 77.43%, as reported in the last twelve months as of Q2 2024.
It's worth noting that Tenable is currently trading at a high Price/Book multiple of 12.94, which may reflect the market's expectations for future growth, especially considering the company's revenue growth of 14.62% in the same period. These financial metrics, coupled with the fact that Tenable operates with a moderate level of debt, paint a picture of a company that is investing in its growth while maintaining financial prudence.
For investors seeking a more in-depth analysis, there are additional InvestingPro Tips available that could provide further insights into Tenable's performance and valuation. With these tools, investors can stay informed about the latest trends and make more educated decisions regarding their investments in the cybersecurity industry.
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