Stock Story -
What Happened: Shares of cybersecurity software maker Tenable (NASDAQ:TENB) fell 15.3% in the pre-market session after the company reported second quarter earnings results. Its full-year revenue guidance was below expectations, and its revenue guidance for next quarter missed Wall Street's estimates. In addition, billings and free cash flow fell below expectations amidst what management considered "more challenging selling environment." Overall, this quarter could have been better and the outlook is weighing on the stock.
Following the results, D.A. Davidson's analyst downgraded the stock's rating from Buy to Neutral and cut its price target from $56 to $40.
The analyst added, "VM (vulnerability management) was an area of strength in Q1 in part due to increasing customer churn from some top VM competitors, and we expected that trend to play out again in Q2...With the exact opposite taking place, greenfield opportunities in VM seemingly drying up, and TENB talking about increased deal scrutiny & lengthening sales cycles in VM, we now believe VM growth could slow even further and become an increasing drag on overall growth despite increasingly favorable competitive dynamics in VM."
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Tenable? Find out by reading the original article on StockStory, it's free.
What is the market telling us: Tenable's shares are quite volatile and over the last year have had 8 moves greater than 5%. But moves this big are very rare even for Tenable and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 6 months ago, when the stock gained 9% on the news that the company reported fourth-quarter results that beat analysts' revenue, calculated current billings, and EPS expectations. It also delivered solid free cashflow. The topline growth benefitted from "healthy customer demand," with the business increasingly closing "larger customers." Notably, the company added 156 net new six-figure customers, which was more than 2x higher than the same quarter last year. On the other hand, its revenue guidance slightly missed analysts' expectations. Overall, the results were still solid.
Tenable is down 6% since the beginning of the year, and at $41.34 per share it is trading 20.3% below its 52-week high of $51.89 from February 2024. Investors who bought $1,000 worth of Tenable's shares 5 years ago would now be looking at an investment worth $1,672.
