Fortinet is the IBD Stock Of The Day as the cybersecurity software company nears a buy point and displays healthy characteristics. FTNT stock recently formed a handle on its current first-stage consolidation.
Based in Sunnyvale, Calif., Fortinet's core business involves selling computer network "firewall" security appliances. Large enterprises and government organizations around the world use its technology.
In that market, Fortinet competes against Palo Alto Networks and others. Firewall appliances protect computer networks by blocking online intrusions and monitoring web-based apps.
Fortinet provides cybersecurity systems and strategies to address the most critical security challenges. That includes networked, application, cloud or mobile environments that the company provides for more than 500,000 customers.
FTNT Stock: Resetting The Base Count
After breaking out to a new high at the end of last year, Fortinet stock pulled back, resetting its base count by undercutting the low in the prior chart pattern.
FTNT stock now has formed a handle on its current first-stage consolidation, showing a 353.08 buy point. The buy zone extends to 370.73. The handle also contains a three-weeks-tight pattern on a weekly chart, as shares tightened up recently after a period of volatility.
In a sign of market leadership, the relative strength line is approaching a 52-week high on a weekly chart, ahead of a potential breakout. The 50-day moving average has remained above the 200-day line, a positive sign during this year's volatility in the stock market indexes.
FTNT stock also is rebounding this week from its 10-week line, a positive indicator. Shares climbed 1.6% to close at 340.58 Wednesday.
According to a Goldman Sachs survey of chief information officers, security remains the top spending priority in 2022, followed by business intelligence/analytics, public cloud, software-as-a-service applications and computer network switching.
Cybersecurity Spending Of $172 Billion
Cybersecurity spending worldwide climbed 13% in 2021 to $172 billion, according to market research firm Gartner, accelerating from 8% growth in 2020. In both 2022 and 2023, Gartner forecasts 11% growth in cybersecurity spending.
Fortinet presented December-quarter results in early February that topped analyst estimates. The 2022 guidance for FTNT stock also came in above expectations. Revenue climbed 29% from the year-ago period to $963.60. Earnings climbed 16%.
For full-year 2022, Fortinet said it expects per-share earnings in a range of $4.85 to $5. It forecast revenue in a range of $4.275 billion to $4.325 billion. Analysts had projected earnings of $4.62 per share on revenue of $3.965 billion.
Over the last three years, Fortinet has delivered average annual earnings growth of 31%. For the same period, yearly revenue gains have averaged a solid 22%.
Company Results Due In May
The company reports its first-quarter results in early May.
Keep in mind that it's risky to buy any stock just before it reports. You can minimize your risk by waiting to see the actual numbers and the market's reaction.
Fortinet has an IBD Composite Rating of 97 out of 99. That means FTNT stock is outpacing 97% of all stocks in terms of the most important stock-picking traits.
It ranks No. 3 among its peers in the Computer Software-Security industry group. Qualys is the No. 1-ranked stock within the group, followed by CrowdStrike.
Fortinet is also on IBD Long-Term Leaders, showing a track record of earnings stability.
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