Barclays downgrades Tenable Holdings as it repositions for secular growth, raises ‘leader’ Zscaler

In separate notes on Monday, Barclays analysts upgraded Zscaler (NASDAQ:) to Overweight and downgraded shares of Tenable Holdings, Inc. (NASDAQ:) to Equal Weight.

They told investors the firm is upgrading ZS and lifting the price target to $190 from $176 as they like the secular growth in SASE.

“This is a positioning call, as we like the growth opportunity in SASE, which could be as big as network security in CY26, and we think ZS is a leader,” explained the analysts.

“We think there is a growing platform story with ZDX, Zscaler for Workloads, and data protection, some of which are progressing slightly faster than its successful ZPA product – outside of the platform, we also see more room for adoption in US federal with growing demand for zero trust security platforms,” the analysts added.

Barclays also raised its FY24 billings estimate for ZS and extended its model out to FY26E with 20% billings growth and “healthy EBIT/FCF margin expansion.”

Meanwhile, the analysts lowered the price target for TENB to $47 from $51 per share, stating they are repositioning for more secular growth following the firm’s CIO survey.

“Our CIO survey published today showed that while VM remains a top 3 spending area, its prioritization was down materially versus our 1H23 survey – combined with market forecasts, we are repositioning our coverage within security for more secular growth,” the analysts contend.

“We think consensus CCB estimates may be a tad high in FY24, which calls for moderate acceleration,” they added.