Tenable leads cybersecurity stocks lower after BTIG downgrade
cemagraphics

Tenable (NASDAQ:TENB) was among the largest declining cybersecurity stocks on Monday after analyst Gray Powell of investment firm BTIG downgraded the company on worries that its core vulnerability management target market is slowing at a "faster-than-expected pace."
Powell lowered his rating on Tenable (TENB) shares to neutral from buy, noting that while BTIG is bullish on the company's moves into new products, it may not be enough to boost revenue.
"While we remain bullish on some of [Tenable's] new product initiatives, we do not think they are big enough to offset this core market deceleration," Powell wrote in a note to clients. Powell also lowered his billings growth forecast to 17% year-over-year in 2023, down from a previous estimate of 20% growth.
Tenable (TENB) shares fell more than 9% to $30.77 in mid-afternoon trading. Other cybersecurity stocks fell in sympathy, including Zscaler (ZS), Palo Alto Networks (NASDAQ:PANW), Crowdstrike (CRWD) and CyberArk Software (CYBR), all of which declined 5% or more.
Subsequently, Fortinet (NASDAQ:FTNT) slipped into the red even after being upgraded to overweight from equal-weight by analyst Hamza Fodderwala at Morgan Stanley.
Fodderwala said security demand is "durable" even amid the uncertain macroeconomic environment, and called Fortinet (FTNT) an "underappreciated 30% [free cash flow] compounder."
Fodderwala said that while investors are concerned with the cyclical nature of the firewall business, such sentiment "materially underestimates Fortinet's secular growth drivers" and opportunity to consolidate greater than $100 billion in annual market spending across security and networking technologies.
Additionally, Fodderwala said that recent checks indicate "durable" demand and a large order backlog heading out of 2022, and Fortinet (FTNT) should at least a generate 20% top-line compound annual growth rate over the next five years, along with 30% compound annual growth rate in free cash flow.
Fortinet (FTNT) shares declined fractionally to $51.28 in mid-day trading.
Late last month, Wedbush Securities said Tenable (TENB) and several other software companies would likely see a benefit from increased spending by the U.S. government on cybersecurity.