As the economy trends further toward digitization, companies are constantly having to evolve by moving their operations online. This has created an entirely new set of risks, and therefore, cybersecurity has become one of the most important industries in the corporate world.
Recent surveys by Morgan Stanley and Pricewaterhouse Coopers have shown that company leaders say they are very unlikely to cut back on cybersecurity spending even in the face of a recession. Moreover, among the various external threats to their companies' growth prospects, company leaders were most likely to say they were highly concerned about cyber risk.
That's why investors might benefit from exposing their portfolios to a quality cybersecurity stock like Tenable (TENB -1.98%). The company is the industry leader in vulnerability management, and as of this writing, not a single Wall Street analyst covering the stock recommends selling it.
Tenable is leading the pack
The threat landscape for corporations has changed dramatically over the last decade with the widespread adoption of cloud computing services. Malicious actors now have a much larger attack surface to go after, which has necessitated the development of new, proactive cybersecurity tools for threat detection and vulnerability management.
Their goal is to actively seek out and neutralize threats before they can penetrate a company's network, and to constantly monitor for potential weak spots that might leave that network vulnerable.
Tenable's Nessus vulnerability management platform is ranked No. 1 in adoption, with over 2 million individual downloads, and deployments within 30,000 organizations. It also holds the top spot for coverage, protecting against over 71,000 common vulnerabilities and exposures (CVEs) which is 20% more than its closest competitors.
The company is constantly expanding its product offerings to serve industry-specific needs whether it's in financial services, manufacturing, energy, and even in the U.S. federal government, to name just a few. That's one reason Tenable counts more than 60% of the Fortune 500 among its clientele.
Tenable continues to attract big contracts
Tenable's second-quarter report, delivered on July 26, revealed further growth across key metrics. The number of its clients spending $100,000 or more on Tenable products every year jumped 27% year over year to 1,191.
That metric has more than doubled over the last three years alone, and it's yet another strong indicator of the appetite the company's largest customers have for advanced cybersecurity tools. This is an important category for Tenable because high-spending customers tend to result in greater profit margins over time -- it typically costs less to service one customer that spends $100,000 than to service 10 customers that spend $10,000 each.
Tenable's revenue ticked up by 26% year over year to $164.3 million in Q2, and the company held firm on its guidance suggesting it could generate $676 million in sales for the year. That's a good sign during these difficult economic times, as many companies in different industries are trimming their forecasts.
Wall Street loves Tenable stock
As of this writing, 16 Wall Street analysts cover Tenable, and not a single one recommends selling its stock. In fact, 15 of them give it a buy rating (the highest rating), while one gives it an overweight rating, which is also bullish.
Their average 12-month price target on the stock is $55.47, 43% above where it trades today.
There are some wide-ranging estimates as to the value of the total cybersecurity industry, but Tenable is eyeing an addressable opportunity it expects will be worth about $25 billion by 2025. It's spread across five key security segments, with cloud and vulnerability management making up about $15 billion of the total. Based on its 2022 revenue guidance, it has a long runway for growth if its 2025 market projections prove accurate.
Tenable is attacking its opportunity from a leadership position already, so if investors are going to add a cybersecurity company to their portfolio, it might as well be the best one in the business.