Tenable's Biggest Takeaway Is Doubling Its Unlevered FCF, Analyst Says

  • Needham analyst Mike Cikos maintained Tenable Holdings, Inc TENB with a Buy and lowered the price target from $52 to $44.
  • He believed the biggest takeaway for investors from TENB's 3Q22 earnings is management's expectation of doubling unlevered free cash flow (uFCF) in the next two years
  • Assuming Revenue growth of 20% from CY22 to CY24 (conservative versus management's previously communicated 20%-plus CAGR), Tenable's uFCF Margin will likely grow from 18% at the midpoint in CY22 to ~25% in CY24. 
  • His back-of-the-envelope math suggests Tenable's targeted $240 Million in CY24 is roughly $1.90 per share in uFCF, or an 18x multiple given today's stock price. 
  • Additionally, management sounded more bullish on its opportunity in the current environment, a departure from its 2Q messaging. 
  • He believes this reflects the more robust print and stable sales cycles. 
  • He expects TENB's shares to react positively to the print and muted expectations.
  • Piper Sandler analyst Rob Owens maintained Tenable Holdings with an Overweight and lowered the price target from $65 to $55.
  • Morgan Stanley analyst Hamza Fodderwala maintained Tenable Holdings with an Overweight and raised the price target from $44 to $47.
  • Wedbush analyst Daniel Ives maintained Tenable Holdings with an Outperform and lowered the price target from $57 to $48.
  • Price Action: TENB shares traded higher by 14.7% at $39.26 on the last check Wednesday.
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