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On Monday, Cantor Fitzgerald initiated coverage on Tenable Holdings, a leader in vulnerability management, with a favorable Overweight rating and a price target of $50.00. According to InvestingPro data, the stock currently trades at $34.94, near its 52-week low, while analyst targets range from $40 to $55, suggesting significant upside potential. Tenable, recognized for establishing the exposure management category, has experienced a shift in its market dynamics. The firm’s vulnerability management growth has decelerated since the surge in 2022, which saw a 26% increase in top-line growth, fueled by a favorable spending climate, low interest rates, and a spike in demand following the Log4j vulnerability.
Tenable’s vulnerability management segment constitutes approximately 80% of its business. The current growth forecast for this segment is in the mid to high single digits, indicating market maturity, subdued demand, and slight cyclicality. Conversely, the company’s non-vulnerability management exposure solutions, particularly its Cloud Security offerings, are rapidly expanding with an estimated 28% year-over-year growth. InvestingPro data reveals impressive gross profit margins of 77.82% and overall revenue growth of 12.68% in the last twelve months, demonstrating strong operational efficiency.
Cantor Fitzgerald highlighted Tenable’s financial efficiency, noting a remarkable 25.2% operating margin in the fourth quarter of 2024. Despite the challenges in its core business, Tenable’s valuation appears to compensate for the slower growth. The stock is trading at a multiple of 4.1 times its expected FY25 enterprise value to revenue, a stark contrast to its peers, which trade at an average of 9.8 times. Yet, Tenable is projected to achieve around a 10% growth in FY26, compared to the 15% anticipated for its competitors.
The research firm’s positive outlook is based on the potential of Tenable’s platform, the prospects for continued margin expansion, and an attractive entry point for investors. The $50 price target is derived from 6.1 times the company’s projected FY25 enterprise value to revenue. InvestingPro analysis indicates the stock is currently undervalued, with multiple additional ProTips and detailed financial metrics available to subscribers through the comprehensive Pro Research Report.
In other recent news, Tenable Holdings Inc (NASDAQ:TENB). reported fourth quarter adjusted earnings per share of $0.41, surpassing the analyst consensus of $0.34. The company’s revenue for the quarter reached $235.7 million, marking an 11% increase year-over-year and exceeding the projected $231.54 million. However, Tenable’s guidance for the first quarter and full year 2025 fell short of analyst expectations, forecasting Q1 adjusted EPS of $0.28-$0.30 and Q1 revenue between $232-234 million. For the full year 2025, Tenable projects adjusted EPS of $1.52-$1.60 on revenue of $971-981 million, compared to consensus estimates of $1.45 EPS and $982.9 million in revenue.
Additionally, Tenable announced plans to acquire Vulcan Cyber Ltd. to enhance its exposure management platform capabilities. In terms of analyst activity, JPMorgan analyst Brian Essex raised the price target on Tenable to $53.00 from $50.00, maintaining an Overweight rating. The adjustment reflects Tenable’s recent performance, which exceeded expectations in growth and profitability. Essex highlighted the company’s strong free cash flow outlook and its significant growth driven by large deals and the adoption of its Tenable One and Exposure Solution products. Despite some uncertainty in federal transactions, Tenable has not observed any contract cancellations or changes in federal projects.
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