Tenable leads cybersecurity shares decrease after BTIG downgrade; Fortinet upgraded

Tenable (NASDAQ:TENB) was among the many largest declining cybersecurity shares on Monday after funding agency BTIG downgraded the corporate on worries that its core vulnerability administration goal market is slowing at a “faster-than-expected tempo.”

Analyst Grey Powell lowered his score on Tenable (TENB) shares to impartial from purchase, noting that whereas BTIG is bullish on the corporate’s strikes into new merchandise, it is probably not sufficient to spice up income.

“Whereas we stay bullish on a few of [Tenable’s] new product initiatives, we don’t assume they’re large enough to offset this core market deceleration,” Powell wrote in a word to purchasers. Powell lowered his billings development estimate to 17% year-over-year in 2023, down from 20% beforehand.

Tenable (TENB) shares fell greater than 9% to $30.77 in mid-afternoon buying and selling. Different cybersecurity shares fell in sympathy, together with Zscaler (ZS), Palo Alto Networks (NASDAQ:PANW), Crowdstrike (CRWD) and CyberArk Software program (CYBR), all of which declined 5% or extra.

Subsequently, Fortinet (NASDAQ:FTNT) bucked the development after being upgraded by Morgan Stanley, with the agency calling it an “underappreciated 30% [free cash flow] compounder.”

Analyst Hamza Fodderwala increase his score on Fortinet (FTNT) to obese from equal-weight, mentioning that safety demand is “sturdy” even amid the unsure macroeconomic setting.

“Whereas traders are involved with the cyclical nature of the firewall enterprise, we consider this materially underestimates Fortinet’s secular development drivers (SD-WAN, OT Safety), accelerating share achieve and alternative to consolidate [greater than] $100 billion in annual market spend throughout safety and networking,” Fodderwala wrote in a word to purchasers.

The analyst added that current checks point out “sturdy” demand and a big backlog exiting 2022 and Fortinet (FTNT) ought to no less than a generate 20% top-line compound annual development charge over the following 5 years, together with 30% compound annual development charge in free money stream.

Fortinet (FTNT) shares declined fractionally to $51.28 in mid-day buying and selling.

Late final month, Wedbush Securities stated Tenable (TENB) and several other different software program firms would seemingly see a profit from elevated spending by the U.S. authorities on cybersecurity.