Increased online activity amid the pandemic-induced “everything-from-home” wave is calling for stronger security solutions and secure networking products. This trend is driving the demand for network security player Fortinet’s (FTNT) solutions.
Robust momentum in products such as the Fortinet Security Fabric and Software-defined Wide Area Network (SD-WAN) offerings are forming a strong backbone for the company’s growth. (See Analysts’ Top Stocks on TipRanks)
Notably, according to cybersecurity research firm Cybersecurity Ventures, global spending on cybersecurity products and services are expected to reach $1.75 trillion cumulatively over 2021 to 2025. This gives us a fair idea of the demand environment for Fortinet’s products, given its leadership position in the security space.
Encouraging Q3 Print
On November 4, Fortinet released impressive Q3 results wherein it delivered a 12.5% year-over-year rally in non-GAAP earnings per share, as well as a 33.2% jump in revenues.
Continued deal wins, particularly those of high value, were key performance drivers. Secure SD-WAN continued to be the leading contributor to growth in deals worth more than $1 million in Q3. Notably, 19 of the large deals won during the quarter were based on secure SD-WAN.
A raised revenue and EPS guidance for the full year of 2021 also sat well with investors.
Nonetheless, it is also important to mention here that the management lowered its expectations for 2021 non-GAAP operating margins, as it expects pressures from acquisitions, unfavorable foreign exchange variations, and increased travel and marketing costs to hang over margins.
Experts Opine
Following the print, Deutsche Bank analyst Patrick Colville reiterated a Hold rating on the stock, and raised his price target to $320 from $293. He observes that Fortinet is thriving in a healthy cybersecurity spending market, and gaining share in the firewall space.
Moreover, investments in the fast-growing SD-WAN market also seem to bode well for the company, according to Colville.
Wall Street analyst consensus is cautious but optimistic about Fortinet, with a Moderate Buy rating based on 12 Buys and seven Holds. The average Fortinet price target of $371.74 indicates an upside potential of 11.6%.
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Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.
