According to a Pricewaterhouse Coopers survey of top CEOs around the world, 48% ranked cyber risks as the No. 1 threat to the growth of their businesses. In the financial services sector specifically, that number was 59%. In both cases, cyber risk was the top-ranked concern in a list that also included climate change and health risks.
Furthermore, top Wall Street investment bank Morgan Stanley recently asked 100 chief investment officers which costs they are least likely to cut in the event of a worsening economy, and cybersecurity topped that list, too.
As interest rates climb higher, the chance of an economic slowdown in the U.S. will also continue to rise. For investors trying to navigate the tricky conditions in the stock market, the cybersecurity space might be one of the best places to find shelter. Tenable (TENB -0.50%) is the industry's leading vulnerability management company, and here's why it's a buy right now.
Tenable is staying ahead of the curve
In a modern economy where companies are migrating more of their operations online, traditional cybersecurity tools simply aren't enough. Threat detection and vulnerability management are fast-growing segments of the industry, and they focus on proactively plugging holes in cyber defenses and using advanced algorithms to predict where risks might come from.
In other words, it's all about staying one step ahead of potential cyberattackers.
Tenable owns Nessus, which is the world's leading vulnerability management platform. It serves 30,000 organizations and has 2 million individual downloads. Nessus is currently ranked No. 1 across multiple categories including adoption, coverage, and accuracy. It protects customers against over 70,000 known common vulnerabilities and exposures, with the lowest rate of false-positive readings in the industry, which speaks to its reliability.
This leadership position has given Tenable a platform to build out an entire suite of cybersecurity tools tailored to specific purposes. Tenable.cs focuses on protecting assets and operations in the cloud, a significant point of risk for most large organizations now. Tenable.cs integrates with most top cloud service providers like Amazon's Amazon Web Services and Microsoft's Azure, and it serves high-profile customers including the National Basketball Association (NBA).
Whether a company operates in financial services, manufacturing, or even healthcare, Tenable has a cybersecurity solution.
Tenable has been a reliable performer
Tenable stock has fallen 6.4% in 2022. That doesn't sound like a good result, but it's stellar compared to the Nasdaq-100 technology index, which is down 26.6% year to date. Tenable is outperforming the index by an impressive 20.2 percentage points.
The aforementioned survey results might be leading to positive sentiment toward cybersecurity companies generally, but Tenable also has a strong track record of consistent compound annual revenue growth of 34.8% between 2016 and 2021. And importantly, its pool of top-spending customers with an annual contract value of $100,000 or more is growing far more quickly, rising 54.6% each year over the same period.
It indicates that larger organizations are moving much more quickly to protect their businesses from cyber threats.
Tenable's annual revenue is expected to climb to another all-time high in 2022, and its six-figure customer base continued to expand in the first quarter.
Wall Street is bullish on Tenable
In light of the cybersecurity industry's broader tailwinds and Tenable's growth, it's not surprising Wall Street is positive on the stock. Of the 15 analysts that cover it, 14 of them recommend buying, with one maintaining an overweight rating. No analysts recommend selling.
The average price target on the Street for Tenable stock is $68.71, which represents 36% upside from where it trades today. But three investment firms currently have a price target of $75, suggesting upside potential of 49%.
While those returns aren't earth-shattering, they certainly would be if the U.S. economy entered a recession. And if that happened, it's likely that cybersecurity spending would be relatively unaffected based on the corporate world's attitude toward the threat landscape right now. That makes Tenable a great addition to any diversified stock portfolio.
