Fortinet stock soared on Wednesday after the cybersecurity provider reported second-quarter earnings and revenue above Wall Street analyst estimates. Operating margin growth was a bright spot for Fortinet stock.
Also, Fortinet earnings came in after the market close on Tuesday. On the stock market today, Fortinet stock surged 25.3% to close at 69.93.
At Jefferies, analyst Joseph Gallo said in a report: "Q2 billings of flat year-over-year growth was better than feared while 35% operating margin was vastly better than expected. Fortinet maintained 2024 billings guide but deferred (firewall) product refresh expectations to 2025. Shares should see a higher floor given better margins which appear sustainable."
Fortinet earnings in the June quarter rose 50% to 57 cents on an adjusted basis. Revenue climbed 11% to $1.43 billion.
Meanwhile, analysts expected Fortinet earnings of 41 cents a share on sales of $1.4 billion.
Additionally, the Sunnyvale, Calif.-based firm said billings, a sales growth metric, was flat at $1.54 billion, the same as a year earlier, compared with analyst estimates of $1.52 billion.
Fortinet Stock: Q3 Guidance
For the current quarter ending Sept. 30, Fortinet forecast revenue in a range of $1.445 billion to $1.505 billion. Analysts had projected revenue of $1.47 billion. Fortinet sad it expects billings in a range of $1.53 billion to $1.6 billion versus estimates of $1.59 billion.
Heading into the Fortinet earnings report, the cybersecurity stock was up 4% in 2024 after also underperforming last year.
UBS analyst Roger Boyd in a report said a Fortinet rebound may be in the cards.
"If Fortinet can execute on product evolution in SASE, integration of Lacework/Next DLP (acquisitions), and its push to reinvest in sales and marketing it could make for an interesting 2025 setup, particularly with a planned November analyst day," he said. "But we admit that there are a lot of moving parts."
FTNT Stock: Firewall Growth Slows
The company competes in the firewall network security market versus Palo Alto Networks, Check Point Software Technologies and others. Firewalls block online intrusions and monitor web-based apps.
Growth has slowed in the firewall market as companies buy less computer network gear for on-premises data centers. Companies are shifting business apps and workloads to distributed cloud platforms.
Fortinet and many other cybersecurity firms are focused on a new growth market: Secure Access Service Edge. SASE offers a fast and cost-effective way of securing an organization's branch offices and remote workers.
FTNT stock holds a Relative Strength Rating of 33 out of a best-possible 99, according to IBD Stock Checkup.
The Computer Software-Security group ranks No. 177 out of 197 industry groups that IBD tracks, down from No. 75 six weeks earlier.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
