Morgan Stanley, Stifel Convinced Of Cybersecurity Firm Tenable Holdings' Market Opportunity

With the IPO quiet period expiring, the sell-side is starting coverage of cybersecurity software company Tenable Holdings Inc TENB.

The Analysts

• Morgan Stanley analyst Melissa Franchi initiated coverage of Tenable Holdings with an Equal-weight rating and $31 price target.
• Stifel analyst Gur Talpaz started the shares with a Buy rating and $43 price target.

Morgan Stanley Sees Fair Valuation

Tenable Holdings is poised to benefit from the attractive cybersecurity market, which in turn is a beneficiary of the growing need for visibility, the rising predominance of vulnerability management and higher stakes around security breaches for enterprises, Morgan Stanley's Franchi said in a Monday note. (See her track record here.) 

"Tenable's best-of-breed technology in the vulnerability management/cyber risk market combined with recent investments in sales heads and channel relationships have positioned it to garner a higher share of the enterprise security wallet," the analyst said.

The market has the size and growth potential to support multiple winners, Franchi said. 

These factors could drive over 25-percent top-line growth for the next several years, she said. 

Morgan Stanley sees the shares, which are trading at 9.8 times its calendar 2019 revenue estimate, as fairly valued, reflecting both an attractive market opportunity and faster top-line growth.

Stifel: Room For Competition In Vulnerability Management 

Tenable is a clear leader in the vulnerability management market along with Qualys Inc QLYS and Rapid7 Inc RPD, Stifel's Talpaz said in a Sunday note. (See the analyst's track record here.) 

The market can sustain multiple vendors, with meaningful greenfield ahead, the analyst said. 

Tenable, according to the analyst, can help push the evolving mindset of increased focus on risk mitigation and improved time to response for critical events.

The company's current billings increased 49 percent to $235.6 million in 2017, while the number of $100,000-plus ACV accounts more than doubled to 265 and the net expansion rate remained above 120 percent, reflecting increased success in upselling, according to Stifel. 

The Price Action

Tenable's stock has gained 3.6 percent since its July 26 listing. 

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