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 will not be sufficient to spice up income.

“Whereas we stay bullish on a few of [Tenable’s] new product initiatives, we don’t suppose they’re sufficiently big to offset this core market deceleration,” Powell wrote in a be aware to purchasers. Powell lowered his billings progress 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, declaring that safety demand is “sturdy” even amid the unsure macroeconomic surroundings.

“Whereas buyers are involved with the cyclical nature of the firewall enterprise, we imagine this materially underestimates Fortinet’s secular progress 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 be aware to purchasers.

The analyst added that latest checks point out “sturdy” demand and a big backlog exiting 2022 and Fortinet (FTNT) ought to at the very least a generate 20% top-line compound annual progress price over the following 5 years, together with 30% compound annual progress price in free money stream.

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

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