Shares of Fortinet Inc (NASDAQ: FTNT) rallied
2.95% to $73.59 Thursday.
This was the
stock's fourth consecutive day of gains.
Inc. hit a new 52-week high, surpassing its previous peak of $71.63, which the
company achieved on June 5th.
Moskowitz, an analyst from Mizuho, has reiterated a Neutral rating on Fortinet and
set a price target of $74 as of June 15, 2023. This marks an increase from the
previous price target of $68. However, earlier this year in January 2023,
Mizuho had downgraded Fortinet to Neutral from Buy due to some challenges that
the company was facing. Despite this, on April 17, 2023, Mizuho maintained
coverage of Fortinet with a Buy recommendation.
As well, AllianceBernstein
L.P. continues to increase its holdings in Fortinet, Inc., according to the
company’s most recent filing with the Securities and Exchange Commission (SEC).
During the fourth quarter, AllianceBernstein raised its ownership by 15%,
purchasing an additional 3,467,035 shares of the software maker’s stock. The
fund now holds 26,607,677 shares of FTNT.
In terms of
financial performance for Q1 2021 earnings season, Fortinet demonstrated
impressive results. On May 4th the firm released data revealing that they had
generated $1.26 billion during the quarter versus analysts’ expectations of
$1.20 billion – while earning $0.34 per share (EPS) which topped market
projections by $0.05 to deliver a solid outperformance against predicted
earnings reports from last year as well as current projections for FY2022
suggest ongoing strong forward momentum within this segment of technology
driven business verticals. Such predictions indicate a substantial expansion phase
driven primarily by increased adoption rates fueled due largely via digital
transformation endeavours across all sectors amidst an ongoing
net margin for Q1 was 20.46% along with an expected Return on Equity measure
that currently sits at negative 282%. The company has also seen substantial
growth since last year, delivering a 32.2% year over year improvement in
Why the FTNT Weekly
Options Trade was Originally Executed?
Inc soared above its 50-day moving average on May 5 after the security
software leader reported another quarter of bottom-line and top-line growth.
Earnings growth accelerated for the fourth straight quarter, jumping 79% to 34
cents a share.
growth in Q1 was 32% due to strong growth in both product and service revenue.
With 35% product revenue growth, we continue to gain market share while being a
leading product revenue company in the cybersecurity industry. Service revenue
grew over 30% for the first time in a quarter in six years. We believe we have
a significant opportunity to continue to grow service revenue by upselling
value-added security services to our large installed base of customers,"
said Ken Xie, Fortinet founder, chairman and CEO.
The FTNT Weekly Options Trade Explained.....
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2023, for $0.90.
Sold half the FTNT weekly options contracts on Thursday, June 15, 2023for $2.45; a
potential profit of 172%.
Total Dollar Profit is $245 - $90 (cost of contract)
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Inc. is a leading provider of cybersecurity solutions for businesses,
governments and service providers. The company's products and services help
organizations protect their networks, data and applications from cyber threats.
Fortinet was founded in 2000 and is headquartered in Sunnyvale, California. The
company has offices in more than 40 countries and a customer base across
solutions include network security, firewalls, VPNs, intrusion prevention
systems and endpoint security, including antivirus and anti-malware protection.
The company also offers cloud security, which helps customers secure their
cloud environments and application security, which includes web application
firewalls and API security solutions. Fortinet's products are designed to work
together as a cohesive security system, providing customers with a
comprehensive approach to cybersecurity.
Ken Xie is
the founder, board chairman and CEO of Fortinet. He has over 25 years of
experience in the networking and security industries and is widely recognized
as a thought leader in cybersecurity. Other key management team members include
Keith Jensen, who has been with Fortinet since 2014 and has nearly 30 years of
experience in cloud-based software systems.
been consistently profitable over the past few years, with revenue growing
steadily. The company's net income has also been increasing steadily since
2017. Fortinet's profit margin has remained steady, at around 16% over the past
few years. The company has a healthy balance sheet with nearly three times more
assets than liabilities. Fortinet's price-to-earnings and price-to-book ratios
outpace the industry average by approximately 25%. While Fortinet's valuation
metrics are higher than the industry average, this is likely due to the
company's strong growth prospects and market position. Fortinet's stock price
has shown strong growth over the past few years, with the share price
increasing from around $40 in early 2017 to a daily average of between $60 and
$80 per share. The company's market capitalization has grown from approximately
$6 billion in 2017 to over $60 billion in 2022. Fortinet's trading volume has
also increased, reflecting growing investor interest.
cybersecurity industry is growing rapidly, driven by the increasing threat of
cyberattacks and the growing awareness of the importance of cybersecurity among
businesses and individuals. Fortinet faces significant competition from other
cybersecurity vendors, including Check Point Software Technologies, Palo Alto
Networks and Cisco Systems. However, the company's broad range of solutions and
a strong reputation for quality and reliability give it a competitive
cybersecurity industry is also subject to various regulatory and political
issues, including data privacy regulations and concerns over state-sponsored
cyberattacks. Fortinet has proactively addressed these issues, working closely
with governments and industry organizations to develop best practices and
standards for cybersecurity.
invested heavily in research and development, focusing on developing innovative
solutions to address emerging threats.
Further Catalysts for the FTNT Weekly Options Trade…..
boasts outstanding fund sponsorship. Fidelity Contrafund (FCNTX) has increased
its position substantially in FTNT stock in recent quarters. At the end of Q3,
Contrafund owned 700,000 shares. But that number swelled to 2.15 million at the
end of Q1.
Fortinet shares briefly pulled back after Microsoft said a state-sponsored
threat actor based in China carried out malicious activity, getting around a
Fortinet system. Nowinski said the company would likely release a patch for the
didn't expect much of an impact on FTNT stock, which he rates as overweight
with an 80 price target.
Blair's Ho remained positive on FTNT stock following the Microsoft news.
chief marketing officer, John Maddison, laid out the use cases for Fortinet's
technology in a recent deep dive with Ho.
cloud adoption has grown, it has been fairly contrary to what many industry
participants had anticipated: Firewalls still need to play a role in network
infrastructure," he said.
prefer a platform that has a suite of capabilities. Fortinet's systems can
segment networks and protect the edges of data systems. The company also has
cloud-based products, firewall-as-a-service and industrial firewalls.
company appears to have a sound strategy for providing a cohesive approach for
packaging these capabilities in its broadening solution suite," he said.
Ho has an
outperform rating on FTNT stock.
All of this
is showing up in Fortinet's financial reports. In the first quarter, adjusted
profit rocketed 79% to 34 cents per share. Sales surged 32% to $1.26 billion.
analyst Shaul Eyal noted that service revenue grew above 30% for the first time
in six years. Eyal has an outperform rating and 85 price target on FTNT stock.
current quarter, analysts call for Fortinet to earn 34 cents a share on $1.31
billion in sales, up a respective 42% and 27%, according to FactSet.
the cybersecurity sector has been closely monitored by growth investors, given
its increasing importance in the global economy. When Russia invaded Ukraine in
February of last year, the cybersecurity sector made headlines as it was
revealed that Russia attacked Ukraines key digital infrastructure weeks before
the invasion. Many cybersecurity stocks have had a stellar run in the market
since this revelation, and Fortinet Inc. is no exception.
So far this
year, the stock is up 46% and is one of the few stocks that have delivered
positive returns over the last 12-month period too. On the back of this stellar
market performance, Fortinet is now valued at a forward price-earnings ratio of
46, which suggests the company is not cheaply valued anymore.
cybersecurity sector does not get the same attention as the consumer staples
sector, but could be one of the most resilient business sectors during an
economic downturn. According to data compiled by CXOToday, during the 2008
recession, revenue, operating income and many other financial performance
metrics of cybersecurity companies improved compared to previous years, in
complete contrast to many other tech industries that saw their financials
deteriorate due to a sharp decline in consumer discretionary spending.
Investing in Fortinet is likely to help investors generate alpha returns in the
long term and also stabilize investment returns in the short term if the U.S.
economy enters a recession.
revenue has grown in double digits in each of the last 10 years, and the
company has been profitable in all these years as well. In 2022, the company
reported a net profit of $857.3 million, an increase of 41% from 2021. This
improved profitability boosted free cash flows to $1.44 billion in 2022. Over
the last four years, free cash flows have grown at a stellar CAGR of 27%, which
is a testament to how Fortinet has converted revenue growth into cash flows. As
a cash-rich company with promising growth prospects, Fortinet will be able to
utilize free cash flows to fund capital investments in the coming years without
having to tap into capital markets unnecessarily.
Sunnyvale, Calif.-based cybersecurity company is known for its firewalls, and
is expanding into other markets, William Blair analyst Jonathan Ho said in a
recent note to clients. That includes hybrid and multicloud environments,
"zero trust" and endpoint security, and device markets.
eyeing a $180 billion market expected to hit $249 billion by 2026, Ho said.
Microsoft recently reported vulnerability in Fortinet's systems, FTNT stock has
jumped back into a buy zone. Wells Fargo analyst Andrew Nowinski says the
Microsoft news serves as further proof of the need for cutting-edge
activity from the likes of China, Russia and others is still rampant,"
Nowinski said in a note. "That is the main reason why spending on cyber
defense cannot slow, despite the ongoing macro challenges. Attackers do not
care if the U.S. is heading toward a recession or negotiating a debt ceiling
raise. Attacks will likely continue unabated."
According to the issued ratings of 32 analysts in the last
year, the consensus rating for Fortinet stock is Moderate Buy based on the
current 7 hold ratings and 25 buy ratings for FTNT. The average twelve-month
price prediction for Fortinet is $72.30 with a high price target of $82.00 and
a low price target of $62.00.
integrated platform approach offers security capabilities across local
networks, wide-area networks, various endpoints and the cloud. This expansive
portfolio of security solutions has enabled the company to build competitive
advantages over time, which are now helping it earn economic profits. Across
these use cases, Fortinets total addressable market is currently estimated at
$180 billion, which is expected to swell to $280 billion by 2026. To penetrate
this market, the company is investing in both software and hardware-based
The highly diversified nature of
Fortinets business is another appealing characteristic. With recession risks
continuing to loom on the horizon, investors need to ensure that the companies
they are considering for investment are not reliant on one business sector.
stock traded up $2.82 during trading hours on Monday, hitting $70.95. The
company had a trading volume of 6,089,667 shares, compared to its average
volume of 4,988,387. The company has a 50-day moving average price of $66.31
and a two-hundred day moving average price of $58.64. Fortinet, Inc. has a 1
year low of $42.61 and a 1 year high of $71.63. The firm has a market cap of
$55.71 billion, a P/E ratio of 56.21, a P/E/G ratio of 3.19 and a beta of 1.15.
The company has a debt-to-equity ratio of 86.92, a quick ratio of 1.24 and a
current ratio of 1.34.
Fortinet is well-positioned to benefit from the growing demand for
cybersecurity solutions. The company's broad range of products and services
gives it a competitive advantage.
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