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Oct. 21, 2015, 12:34 PM
- Several security tech plays, including ones that were tech sector darlings earlier this year as a torrent of hacking incidents led corporate cybersecurity spend to jump, are selling off on a quiet day for equities.
- Major decliners include Palo Alto Networks (PANW -4%), FireEye (FEYE -4.9%), Fortinet (FTNT -4.3%), CyberArk (CYBR -4.8%), Imperva (IMPV -5.3%), Proofpoint (PFPT -3.9%), Qualys (QLYS -2.8%), and Rapid7 (RPD -6.8%).
- No major news has arrived to trigger a selloff. Meanwhile, hacking-related stories have continued producing ink in recent weeks. Notable ones: China is reportedly continuing hacking attacks on U.S. firms in spite of a pact that banned government spying on companies; authorities are probing a potential Russian hack of Dow Jones; and ISIS has reportedly tried (without much success) to hack the U.S. electrical grid.
- The PureFunds ISE Cyber Security ETF (HACK -1.6%) is down 24% from a June peak of $33.91. YTD, it's only down modestly.
- Proofpoint reports earnings after the close, and Fortinet tomorrow afternoon. Qualys reports on Nov. 2, FireEye on Nov. 4,, CyberArk on Nov. 5,, and Rapid7 on Nov. 12,
- Update: One potential culprit: Server virtualization software leader VMware is cratering due to its soft Q4/2016 guidance (partly blamed on cloud adoption). A smattering of other high-beta enterprise tech names are also selling off.
Sep. 17, 2015, 6:47 PM
- Unified threat management (UTM) appliance leader Fortinet (NASDAQ:FTNT) has launched an app that leverages machine data analytics software leader Splunk's (NASDAQ:SPLK) platform to analyze log data produced by Fortinet's FortiGate appliances, and by doing so improve threat-detection and response times. (PR)
- Fortinet has also developed an add-on for the Splunk Enterprise platform that ingests and maps security and traffic data collected from Fortinet appliances into Splunk's software. Splunk: "By harnessing the threat data captured by the FortiGate devices, and translating that quickly into actionable intelligence and remediation steps, organizations can better leverage Splunk as the Nerve Center in their [security] command centers..."
- Splunk mentioned on its Q2 call (transcript) it saw triple-digit Y/Y bookings growth the Splunk App for Enterprise Security, which runs on top of Splunk Enterprise. A deal was struck in July to buy Caspida, a security analytics software firm whose products rely on machine learning and behavioral analytics.
Aug. 6, 2015, 3:56 PM
- Security tech names are among the big decliners (HACK -2.7%) on a day the Nasdaq is off 1.6%. Various other high-beta tech names are also hard-hit.
- Major decliners include Palo Alto Networks (PANW -8.1%), Fortinet (FTNT -4.5%), AVG (AVG -8.1%), Proofpoint (PFPT -4.1%), and newly-public incident-detection/threat-response software firm Rapid7 (RPD -5.7%). Qualys is down 13.5% today after filing its Q2 10-Q.
- Rapid7 is now down 25% from its July 17 opening trade of $26.75, albeit still up 25% from its $16 IPO price. AVG is adding to the 2.5% decline seen yesterday after the company posted a slight Q2 EPS beat, hiked full-year revenue guidance by $10M to $420M-$440M, and reiterated EPS guidance of $1.80-$1.90.
- An afternoon report that the Pentagon has been the victim of a "sophisticated cyberattack" launched by Russia hasn't done much to lift the group. NBC News reports the attack "relied on some kind of automated system that rapidly gathered massive amounts of data and within a minute distributed all the information to thousands of accounts on the Internet." Officials believe it to be "the work of a state actor."
Jul. 23, 2015, 11:27 AM
- As was the case 3 months ago, security tech plays are up strongly (HACK +3.6%) after Fortinet (FTNT +12%) beat estimates, reported strong billings, and delivered above-consensus top-line guidance. The Nasdaq is up 0.3%.
- In addition to FireEye, Palo Alto Networks, and CyberArk (previously covered), gainers include Barracuda Networks (CUDA +6.4%), KEYW Holding (KEYW +4.5%), Symantec (SYMC +1.9%), Imperva (IMPV +7.6%), Proofpoint (PFPT +3.6%), Vasco (VDSI +4.5%), AVG (AVG +3.1%), and Qualys (QLYS +5.7%). AVG is benefiting a bullish JPMorgan coverage launch; Proofpoint reports after the close.
- JPMorgan's Sterling Auty has upgraded Fortinet to Overweight, and a slew of firms have hiked their targets. Auty argues Fortinet's numbers suggest its efforts to grow its high-end presence (aided by major sales investments in recent years), and forecasts free cash flow will rise 43% this year.
- On Fortinet's earnings call (transcript), CFO Drew Del Matto mentioned $100K+ deals rose 53% Y/Y and $1M+ deal 133% (compares with 40% total billings growth). He also mentioned the company's high-end FortiGate UTM/next-gen firewall appliances made up 45% of billings (a new high), and that U.S. enterprise sales (benefiting from strong cybersecurity spend) rose 90%. Major deals were struck with "two of the most recognizable technology brands in the world," as well as two large i-banks.
Jul. 23, 2015, 9:15 AM
Jul. 22, 2015, 5:41 PM
Jul. 22, 2015, 5:17 PM
- Fortinet (NASDAQ:FTNT) has followed up on its Q2 beat by guiding in its earnings slides (.pdf) for 2015 revenue of $1B-$1.01B and EPS of $0.51-$0.52. The latter (pressured by heavy spending) is only in-line with a $0.51 consensus, but the former is soundly above a $943M consensus.
- Likewise, Q3 guidance is for revenue of $255M-$260M and EPS of $0.12 vs. a consensus of $235.3M and $0.14.
- Q2 billings totaled $297.2M, +40% Y/Y, above guidance of $263M-$268M and well above revenue of $239.8M (+30%). Q3 billings guidance (possibly conservative, given Fortinet's history) is at $285M-$295M (+36%), and full-year guidance at $1.2B-$1.21B (+34%). Billings growth led the deferred revenue balance to rise 37% Y/Y to $657.6M.
- Shares have jumped to $46.50 AH. Security tech peers are also up: FireEye (NASDAQ:FEYE) +2.5%, Palo Alto Networks (NYSE:PANW) +1.4%, CyberArk (NASDAQ:CYBR) +1.7%. Check Point provided strong numbers earlier today.
- Fortinet's Q2 results, PR
Jul. 22, 2015, 4:20 PM
- Fortinet (NASDAQ:FTNT): Q2 EPS of $0.11 beats by $0.02.
- Revenue of $239.8M (+30.3% Y/Y) beats by $12.06M.
Jul. 21, 2015, 5:35 PM| Jul. 21, 2015, 5:35 PM | 5 Comments
Jul. 15, 2015, 3:03 PM
- Editor's note: To a large extent, Fortinet is looking to differentiate its NGFWs relative to those of Palo Alto Networks (NYSE:PANW) and other rivals via the high performance/throughput enabled by the company's proprietary ASICs. Palo Alto has emphasized the software features of its NFGWs (particularly with regards to app/user visibility) as much as their performance.
Jul. 9, 2015, 2:26 PM
- Security tech plays are outperforming amid a 0.4% gain for the Nasdaq. The rally comes a day after the NYSE suffered a lengthy outage, United Airlines grounded flights, and the WSJ's site briefly went down.
- All three incidents have been blamed on tech issues rather than attacks/breaches, but questions linger. FBI director James Comey: "We do not see any indication of a cyber breach or cyber attack ... But again, in my business, you don't love coincidences." Ex-White House cybersecurity advisor Richard Clarke: "Right now, anybody who says they know for sure what happened before the forensic work has been done is kidding themselves."
- Also: In a bit of good PR/convenient timing for the group, representatives from the PureFunds Cyber Security ETF (HACK +1.6%) rang the NYSE's opening bell today. The NYSE says the event was booked months in advance.
- Standouts include CyberArk (CYBR +4%), FireEye (FEYE +2.7%), KEYW Holding (KEYW +5%), Fortinet (FTNT +2.4%), Check Point (CHKP +2.6%), Imperva (IMPV +2.9%), Zix (ZIXI +2.8%), Proofpoint (PFPT +2.7%), and Vasco (VDSI +2.5%). Barracuda (CUDA +2%) reports after the bell.
Jul. 8, 2015, 1:41 PM
- Fortinet's (FTNT - unchanged) $44M ($1.63/share) acquisition of enterprise Wi-Fi hardware/software vendor Meru Networks (MERU - unchanged) is officially on the books. The deal was first announced on May 27.
- Meru will operate as a Fortinet subsidiary. Echoing prior remarks, Fortinet declares Meru will allow it to "deliver new solutions and services to help enterprises of all sizes deploy, manage, and secure wired and wireless networks in a mobile era."
- Shares are two days removed from getting hit by a Cowen downgrade to Underperform. Oppenheimer once more defended Fortinet yesterday. "Our bullish stance is driven by continued strength from high-end appliances, strength across all geographies and verticals notably within the Telco vertical, and Fortinet's Advanced Persistent Threat (APT) solution continues to see solid demand as APT remains prevalent."
Jul. 6, 2015, 10:01 AM
- Cowen's Gregg Moskowitz has downgraded unified threat management (UTM) appliance leader Fortinet (NASDAQ:FTNT) to Underperform, and set a $37 target. Simultaneously, he has upgraded rival/next-gen firewall leader Palo Alto Networks (PANW +0.8%) to Outperform, and hiked his target by $30 to $205.
- Moskowitz on Fortinet: "The security market remains strong, and the co.'s recent execution has unquestionably been very good. However, we believe tougher compares, an increasingly competitive environment, and challenges truly penetrating the enterprise could make it difficult for FTNT to meet or exceed investor expectations over the next 12-18 months."
- Moskowitz on Palo Alto: " Following 1) our recent checks that indicate continued strong momentum, 2) a higher level of optimism in upside to our CY15-16 [estimates]., and 3) the build-out of preliminary CY17 numbers that, in our view, actually makes valuation look inexpensive relative to growth, we believe the shares have more room to run."
- Citi and Baird downgraded Fortinet on June 24, with the latter stating security resellers "tell us they prefer Palo Alto to Fortinet as a long-term, strategic partner." At the same time, Baird admitted Fortinet's UTM appliances (aided by their use of custom ASICs) have "a clear advantage" in high-throughput applications such as HFT.
Jun. 24, 2015, 5:49 PM
- In addition to a downgrade to Neutral from Baird's Jayson Noland, Fortinet (NASDAQ:FTNT) saw Citi's Walter Pritchard made a similar ratings cut today. Like Noland, Pritchard hiked his target (by $3 to $44) while downgrading.
- Pritchard expects share gains to remain a driver for Fortinet, but expects them to be on "less of an upward trajectory" than for other security tech plays such as Palo Alto Networks and Proofpoint. "FTNT has gained nearly 200bp of share a year over five years, but this pace of gains has slowed somewhat in the last two years ... model ~125bps of share gains per year in core firewall/UTM [hardware] through 2019."
- He adds attach rates for Fortinet's value-added subscriptions are already high, and that the subscriptions are an "all or nothing" decision for buyers. "Thus, while on paper there is room to gain from attach, we view it as more linked to sale of product than incremental success with attach on installed base."
- Noland is a little more upbeat, predicting Fortinet's fundamentals will remain strong, that checks "have remained consistent and mostly positive," and that major sales/marketing investments are paying off. "The company has a clear advantage in applications requiring high throughput (e.g., HFT) which is a function of custom silicon versus a competitive landscape reliant on merchant silicon."
- At the same time, he states security resellers "tell us they prefer Palo Alto (NYSE:PANW) to Fortinet as a long-term, strategic partner." Noland also observes Fortinet's U.S. growth has skewed heavily towards enterprise sales (+70% Y/Y in Q1), and that SMB and service provider sales (roughly flat) have been softer.
- Fortinet closed down 3.5%, and Palo Alto down 1.5%. Other cybersecurity plays also sold off on a day the Nasdaq fell 0.7%.
Jun. 24, 2015, 8:38 AM
- In what appears to be a valuation call, Baird has downgraded Fortinet (NASDAQ:FTNT) to Neutral, while hiking its target by $6 to $46.
- The unified threat management appliance vendor has fallen to $42.00 premarket. Shares have more than doubled from their late-2013/early-2014 lows. They trade for 6.8x the midpoint of Fortinet's 2015 billings guidance (possibly conservative, given past guidance hikes).
- Last week: Oppenheimer hikes Fortinet target, reports strong checks
Jun. 16, 2015, 3:44 PM
- Oppenheimer's Shaul Eyal (Outperform rating): "We are raising our PT to $46 from $39, nudging our 2Q revenue estimate higher following mid-Q checks suggesting (yet again) FTNT's business is tracking ahead of guidance."
- He adds his bullish stance on the UTM appliance leader's sales is based on growing $500K+ Q2 contract wins, strong telecom sales, ongoing high-end appliance traction, and strong demand across all geographies.
- Shares have made new highs, and (thanks to both good earnings news and strong investor interest in nearly anything cybersecurity-related) are up 39% YTD.
Fortinet Inc is provider of network security solutions that are designed to address the fundamental problems of an increasingly bandwidth-intensive network environment and a more sophisticated information technology threat landscape.
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