Cybersecurity solutions provider Tenable Holdings, Inc.’s (TENB) shares have gained 60% over the past year to close yesterday’s trading session at $35.84. As the world adapted to remote working and learning trends amid the COVID-19 pandemic, the demand for cybersecurity measures increased significantly. This is also reflected in TENB’s 21.7% year-over-year revenue growth in the fourth quarter, ended December 31.
TENB’s customers include more than 50% of the Fortune 500 companies and more than 30% of the Global 2000 companies. Investors are also hopeful about the company’s near-term prospects because it entered a definitive agreement in February to acquire Alsid SAS, a leader in Active Directory security.
Here are the factors that we think could influence TENB’s performance in the upcoming months:
Increasing Need for Cyber Security
Because people and businesses worldwide are now much more dependent on cloud-based infrastructure and digital platforms, the demand for cyber exposure management has increased. It is now of the utmost importance to be protected from cyberattacks. In fact, according to Fortune Business Insights, the global cybersecurity market is expected to grow at a CAGR of 12% during 2021-2028.
TENB, which is a pioneer in the IT Vulnerability Management market, creating the Nessus platform, is well positioned to capitalize on the rising demand. Its Tenable.io is the world’s first cyber exposure platform.
Numerous Product Launches
TENB launched Tenable.ep in February. It is the industry’s first, all-in-one, risk-based vulnerability management platform designed to scale as dynamic computing requirements change. The company also introduced an enhanced Managed Security Service Provider (MSSP) portal on January 27 to supercharge partners’ cloud-based vulnerability management offerings with Tenable.io. Furthermore, TENB’s Frictionless Assessment capabilities in Tenable.io, used for vulnerability management in the cloud, are also available in Amazon.com, Inc. ‘s (AMZN) Amazon Web Services (AWS).
On March 26, TENB announced that it will become the first and only vulnerability management vendor to partner with the Retail & Hospitality Information Sharing and Analysis Center (RH-ISAC). In December it celebrated a successful year as deepwatch’s preferred risk-based vulnerability management partner.
Favorable Analyst Sentiment
Analysts expect TENB’s revenue to increase 17.1% in fiscal 2021 and 18.9% in fiscal 2022. Its EPS is expected to grow 166.7% for the current quarter, ending March 31, 2021, 50% for the quarter ending June 30, 2021 and 57.9% in fiscal 2021.
It also has an average broker rating of 1.33, indicating favorable analyst sentiment. Of 15 Wall Street analysts that have rated the stock, 14 rated it a Strong Buy or Buy. Also, TENB is expected to hit $60.15 in the near term, which indicates a potential upside of 67.8%.
POWR Ratings Show Promise
TENB has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight different categories. TENB has a B grade for Growth and Sentiment as well in keeping with favorable analyst estimates and sentiment.
The stock also has a B grade for Quality. This is consistent with its trailing-12-month gross profit margin of 82.4%, which is higher than the industry average 48.4%.
In addition to the POWR Ratings grades we’ve just highlighted one can see TENB’s ratings for Value, Momentum, and Stability here.
TENB is ranked #5 of 23 stocks in the Software – Security industry.
Click here to see four other top-rated stocks in the same industry.
The demand for cybersecurity, which was accelerated amid the COVID-19 pandemic, is expected to be sustained in the coming months because the work-from-home trend is likely to continue even after the pandemic–several countries are now witnessing a third wave of infections. We think TENB is well-positioned to gain from this trend because of its market dominance and huge customer base. So, it could be wise to buy the stock now.
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TENB shares were trading at $36.60 per share on Wednesday morning, up $0.76 (+2.12%). Year-to-date, TENB has declined -29.97%, versus a 6.56% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...
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