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Fortinet, Inc. (FTNT), headquartered in Sunnyvale, California, provides cybersecurity and convergence of networking and security solutions. Valued at $44.34 billion by market cap, the company offers secure networking solutions focused on the convergence of networking and security, network firewall solutions, wireless LAN solutions, and secure connectivity solutions. It has a portfolio of over 50 enterprise-grade products, and its global patents stood at 1,318 as of Mar. 31, 2024.
Shares of this leading cybersecurity solutions and services company have underperformed the broader market considerably over the past year. FTNT has fallen 25.6% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 21.6%. But in 2024, the gap narrowed, with FTNT stock declining marginally compared to the SPX’s 16.7% gains on a YTD basis.
Narrowing the focus, FTNT’s underperformance is also apparent compared to the S&P 500 Technology Sector SPDR (XLK). The exchange-traded fund has gained about 23.2% over the past year. Moreover, the ETF’s 14.4% gains on a YTD basis compare to the stock’s loss over the same time frame.
On Jun. 27, FTNT shares closed up more than 3% after Bloomberg Intelligence said it sees cloud security demand expanding as more companies look to train their own AI models.
On May 3, FTNT shares closed down more than 9% after the company reported its Q1 results. Its billings declined 6.4% year over year to $1.41 billion, falling short of the consensus estimates of $1.43 billion. The company’s adjusted EPS was $0.43, beating the Wall Street expectations of $0.38. FTNT’s revenue of $1.35 billion surpassed analyst expectations of $1.33 billion. Meanwhile, the company expects billings to decline 1% in Q2 and revenue between $1.38 billion and $1.44 billion. For the full year, FTNT expects EPS between $1.73 and $1.79 and revenue between $5.75 billion and $5.85 billion.
For the current fiscal year, ending in December, analysts expect FTNT’s EPS to remain unchanged at $1.47 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 36 analysts covering FTNT stock, the consensus rating is a “Moderate Buy.” That’s based on 11 “Strong Buy” ratings, two “Moderate Buys,” and 23 “Holds.”
This configuration has been consistent over the past three months.
Recently, Citigroup research analysts maintained a “Neutral” for FTNT stock and reduced the price target from $68 to $65, implying a potential upside of 12% from current levels.
The mean price target of $70.03 represents a 20.7% premium to FTNT’s current price levels. The Street-high price target of $87 suggests an ambitious upside potential of 49.9%.
On the date of publication, Dipanjan Banchur did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
