DA Davidson on Friday lowered its 12-month price target for Tenable Holdings Inc. (NASDAQ:TENB) to $25.00 from $32.00 and maintained a Neutral rating on the cybersecurity software provider's shares. The analyst team cited a combination of reduced free cash flow (FCF) forecasts and weaker peer valuation multiples as the primary drivers for the cut.
Financial picture and near-term outlook
Despite the valuation adjustment, DA Davidson expects Tenable to deliver "solid Q4 results with modest upside on all metrics." The firm noted that Tenable still posts a robust free cash flow profile, with a free cash flow yield of 10% and levered free cash flow of $250.75 million over the last twelve months. Revenue growth remains in double digits at 11.05%, and gross profit margins are high at 77.93%.
Looking to 2026, DA Davidson projects that Tenable's revenue and operating profit guidance will be roughly in line with consensus estimates. However, the analyst cautioned that Tenable may guide its cloud computing business growth and unlevered free cash flow below current market expectations when management issues outlooks for next year.
Billing model transition creates measurement challenges
A central concern for the analyst is Tenable's ongoing shift from multi-year prepayments to a model favoring annual billings. DA Davidson describes this change as producing a "dislocation" between reported revenue growth and the measured expansion of the cloud computing business. The billing transition, the firm says, could lead Tenable management to downplay cloud business growth as a headline metric for 2026 even though the company is likely to still provide a growth forecast for that segment.
The firm views the billing shift as a structural factor affecting cash-flow timing and visibility, which is reflected in its lowered valuation assumptions.
Peer and analyst reactions
Other brokerages have also adjusted their views and targets in response to Tenable's financial cadence and the billing change. Truist Securities cut its price target to $27 from $42 but retained a Buy rating following a strong third-quarter 2025 performance that beat revenue and operating margin expectations. Needham trimmed its target to $28 from $38, explicitly attributing the adjustment to changes in Tenable's billing practices. Stifel kept a Hold rating with a $35 price target while revising cash flow projections to account for evolving billing patterns.
Product and leadership updates
Separately, Tenable launched Tenable One AI Exposure, an enhancement intended to provide protection, discovery, and governance capabilities for AI across customer environments. The company said the product addresses what it calls the "AI Exposure Gap" by increasing visibility into AI usage across cloud and on-premises systems.
On the leadership front, Tenable named Vlad Korsunsky, a former Microsoft executive, as its new Chief Technology Officer. Korsunsky will lead work from the company's Israel Innovation Center located in Tel Aviv.
Market context
The analyst's revised price target sits in a context where the shares have declined roughly 50% over the past year, and the new target aligns closely with an independent fair-value assessment, suggesting the stock may appear undervalued under current price levels. DA Davidson's adjustment reflects a blend of lower market multiples among peers and the firm's reduced free cash flow forecasts tied to the billing transition.
Conclusion
DA Davidson's downgrade in valuation for Tenable centers on timing and cash-flow implications from a billing-model shift, even as the firm expects near-term operational results to be solid. The combination of persistent high gross margins, meaningful free cash flow generation, and evolving disclosure priorities around cloud metrics frames the current analyst debate over the company's valuation and guidance tone.