🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

Jefferies starts coverage of exposure management stocks. Here are their top picks

Published 16/10/2024, 15:16
QLYS
-
RPD
-
TENB
-

Investing.com -- Jefferies began coverage of exposure management stocks on Wednesday, citing “reason for optimism” within the sector despite cyclical headwinds.

The investment bank said exposure management is projected to reach $53 billion by 2028, which translates to a compound annual growth rate (CAGR) of 16%.

The firm holds a favorable view on Rapid7 (NASDAQ:RPD), assigning a 'Buy' rating with a price target of $50.

“We favor RPD, which has appealing valuation coupled with the most immediate potential beyond core vulnerability management (VM),” analysts said in the note.

Tenable Holdings (NASDAQ:TENB) and Qualys (NASDAQ:QLYS) were both given a 'Hold' rating, with price targets of $45 and $135, respectively.

Jefferies analysts’ bullishness for the exposure management market is based on its expansion from core vulnerability management to include managing cloud infrastructure risks, detecting suspicious network traffic, providing security operations functions, and collecting logs to stop security attacks.

Analysts highlighted that these areas offer significant opportunities for growth, especially for companies with broader capabilities beyond traditional VM.

Rapid7 was identified as having the most immediate potential for success beyond its core VM. business, which accounts for less than 50% of its operations.

The company’s capabilities in Security Information and Event Management (SIEM) and cloud services were deemed critical for its growth, particularly in the current environment where demand for vulnerability management is cyclical and subject to macro pressures.

Jefferies projects a 3-year revenue CAGR of 7.9% for Rapid7 from 2023 to 2026.

Meanwhile, Tenable is seen as “the most established” name in VM and has a substantial customer base.

The launch of Tenable One, a unified platform, could help offset the cyclical and moderating core revenues. Still, with VM still comprising an estimated 70% of its business, Jefferies views its valuation as fair and forecasts a 3-year revenue CAGR of 10.5%.

Lastly, the investment bank views Qualys as one of the leaders in core VM, however, it expects the company to face challenges in growth until it can capitalize on adjacent markets, which currently make up less than 40% of its business.

“QLYS is focused on investing in S&M, but we expect limited upside especially given that it has the second toughest new business (billings) set-up in our broader cyber coverage for CY25,” Jefferies analysts said.

They project a 3-year revenue CAGR of 7.4% between 2023 and 2026.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2024 - Fusion Media Limited. All Rights Reserved.