Fortinet (FTNT) has delivered stellar returns so far this year. Favorable industry trends, and acceleration in growth have led to a rally in Fortinet stock. I’m bullish on the stock.
With a market capitalization of $52.3 billion, the share price of this cybersecurity solutions provider has more than doubled year-to-date. Moreover, it has gained about 172% in one year (See Fortinet stock charts on TipRanks)
Despite the rally, investors’ optimism remains elevated on Fortinet stock. TipRanks’ Stock Investors tool indicates that investors currently have a Very Positive outlook on Fortinet stock, with 7.7% of investors who hold portfolios on TipRanks increasing their exposure over the past 30 days.
It’s worth noting that Fortinet’s billings, product revenue, and total revenue growth rate accelerated sequentially, and could be the reasons behind investors’ optimism.
Fortinet CFO, Keith Jensen, said, “all three growth rates (billings, product revenue, and total revenue) were five-year Fortinet highs and product revenue growth was at its highest in over nine years.”
Management expects strong business momentum to sustain in the second half of this year and raised full-year revenue and billings guidance.
Fortinet now projects revenue of $3.21 billion to $3.25 billion for Fiscal Year 2021, compared to its earlier projection of $3.08 billion to $3.13 billion. Billings are expected to be between $3.87 billion and $3.92 billion.
In response to Fortinet’s upbeat guidance, Daniel Ives of Wedbush stated that the company provided “better than expected guidance which speaks to momentum the company has in our opinion heading into the next year on the heels of this sweet spot product cycle which continues to play out.”
He further added, “Our mid-quarter September checks were incrementally bullish for the cyber security sector as the heightened threat level facing enterprises and governments is driving larger, next generation cyber deals with a further tick up in spending.”
Ives has a buy rating on Fortinet and increased his price target to $350 (9.3% upside potential), from $310.
Overall, FTNT stock has a Moderate Buy consensus rating, based on seven Buys and nine Holds. The average Fortinet price target of $294.47 implies 8% downside potential from current levels.
Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.
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