Is Today's Selloff In Fortinet A Buying Opportunity?
Alpha Gen Capital
Alpha Gen Capital
Fortinet Is Performing Well In The Cyber Security Industry
Can Fortinet Deliver A One-Two Punch Of Growth With Higher Margins?
Stephen Simpson, CFA
Stephen Simpson, CFA
Tue, Jan. 26, 8:38 AM
- Stating Q4 channel checks point to a slowdown in momentum, Deutsche's Imtiaz Koujalgi has downgraded Fortinet (NASDAQ:FTNT) to Hold ahead of the unified threat management/next-gen firewall appliance vendor's Thursday afternoon Q4 report. His target has been cut by $15 to $34.
- FTNT -2.1% premarket to $26.65. Piper downgraded Fortinet last week, while citing a soft Q4 reseller survey, a shift in IT spending priorities, growing price pressure, and tough comps.
- Shares now go for just 3.9x the midpoint of a 2015 billings guidance range of $1.215B-$1.22B.
Wed, Jan. 20, 9:13 AM
Wed, Jan. 20, 8:40 AM
- Piper's Andrew Nowinski has downgraded Fortinet (NASDAQ:FTNT) to Neutral ahead of its Jan. 28 Q4 report, and cut his target by $20 to $30.
- Nowinski: "Our downgrade is based on a number of factors, including waning demand trends highlighted in our 4Q15 reseller survey, a shift in spending priorities noted in our 2016 CIO survey, increasing pricing pressure and difficult comparisons. Despite trading at a modest discount to peers, we believe Fortinet could struggle to exceed expectations for the aforementioned reasons and therefore we believe the current valuation appropriately balances the risk/reward."
- Shares have dropped to $24.56 premarket on a morning Nasdaq futures are down 1.9%. They also fell hard yesterday.
Tue, Jan. 19, 4:20 PM
- Though the Nasdaq fell just 0.3%, a healthy number of beaten-up tech names tumbled to new 52-week lows today, often on strong volume. Margin calls, panic selling, and fund liquidations are on the list of potential culprits.
- The casualty list once more includes action camera vendor GoPro (GPRO -7.8%) and video processor supplier Ambarella (AMBA -6.3%). It also features threat-prevention tech provider FireEye (FEYE -6.8%), virtualization software giant VMware (VMW -6%), and driver-assistance system provider Mobileye (MBLY -5.4%).
- The list also features unified threat management appliance vendor Fortinet (FTNT -6.4%), microcontroller maker Cypress Semi (CY -6.1%), card-reader/payments provider Square (SQ -7.8%), security software/services provider Rapid7 (RPD -9.7%), and enterprise cloud-storage/file-sharing service provider Box (BOX -7.7%).
- EMC (EMC -2.6%), still set to be acquired by Dell (with part of the payout consisting of a VMware tracking stock), felt the effects of VMware's selloff. Mobileye saw Citron Research take another shot via Twitter. "$MBLY CItron not making the $GPRO mistake, stock is still overvalued as a teenager. At $10 it is still an EXPENSIVE $1.8 bil company."
- Square, meanwhile, is now less than 6% above its $9 IPO price, and 15% below a post-IPO opening trade of $11.20. Rapid7 is 11% below its $16 IPO price, and 47% below an opening trade of $26.75.
- Also falling hard today: Solar stocks, Twitter
Dec. 30, 2015, 6:22 PM
- "On the heels of another strong year for cybersecurity players, our recent field checks heading into 2016 suggest 'robust' deal momentum as enterprises and governments across the board upgrade to next-generation security platforms/software," says FBR's Dan Ives, reiterating his bullish stance on security tech upstarts.
- Ives: "Based on our conversations with channel partners/customers over the last few weeks, closure rates look to be trending higher year over year, with seven-figure deals markedly up in the pipeline. This speaks to the massive firewall refresh that is underway, with hot areas of security (next-generation firewall, e-mail security, mobile/cloud) as the main beneficiaries."
- He expects next-gen firewall leader Palo Alto Networks (NYSE:PANW) to be a major beneficiary. Others expected to benefit include firewall/security software vendor Check Point (NASDAQ:CHKP), privileged account security software leader CyberArk (NASDAQ:CYBR), unified threat appliance leader Fortinet (NASDAQ:FTNT), e-mail/compliance security software firm Proofpoint (NASDAQ:PFPT), and Web app firewall and data security software firm Imperva (NYSE:IMPV).
- Ives is less bullish on malware and endpoint-protection hardware and software provider FireEye (NASDAQ:FEYE), citing execution and product-related headwinds. His note comes three weeks after Citi reported a CIO survey pointed to strong enterprise security spend. FireEye (upgraded), Palo Alto, Splunk, and Imperva were favorably mentioned.
- ETF: HACK
Dec. 14, 2015, 9:22 AM
- Believing further downside is limited and that current levels fully reflect his concerns, Cowen's Gregg Moskowitz has upgraded Fortinet (NASDAQ:FTNT) to Market Perform 5 months after downgrading to Underperform.
- The unified threat management (UTM) appliance leader is down 26% since Moskowitz's downgrade, and 39% from an August peak of $50.31. Shares fell hard in October after Fortinet's Q4 guidance disappointed, and now trade for 4.3x the midpoint of the company's 2015 billings guidance range.
- Shares haven't yet moved premarket.
- Update (10:11AM ET): Fortinet is up 1%.
Nov. 5, 2015, 12:47 PM
- Fortinet (FTNT -4.2%), Barracuda (CUDA -3.9%), Vasco (VDSI -1.9%), Proofpoint (PFPT -4.6%), and KEYW (KEYW -6.3%) have joined the ranks of enterprise security tech firms selling off in the wake of FireEye's Q3 revenue/billings miss, soft Q4 sales guidance, and full-year billings guidance cut.
- Other decliners include Palo Alto Networks, CyberArk, and Rapid7. FireEye itself is down 23%.
- Also: PC/mobile security software firm AVG is down 17.7% after missing Q3 estimates and providing light Q4 guidance. Symantec is up slightly following an FQ2 EPS beat.
- The PureFunds ISE Cyber Security ETF (HACK -3.1%) has fallen below $27. CyberArk reports after the bell.
- Update: FBR's Daniel Ives is defending the group. "Importantly, we note that nearly every major cybersecurity player (Check Point, Imperva, Proofpoint, Palo Alto, Fortinet) recently has delivered strong results across the board with a healthy outlook ... We continue to strongly believe that FireEye's issues are much more company-specific as DeWalt & Co. are dealing with a plethora of execution/product headaches in the field, which are major overhangs on the FireEye story heading into 2016. We continue to see white-hot cybersecurity spending, which we view as a 30%+ growth area in a 2%–3% overall IT landscape as the threat landscape escalates. We would be strong buyers of the cybersecurity basket, with PANW, PFPT, and CHKP front and center."
Oct. 23, 2015, 9:14 AM
Oct. 22, 2015, 5:56 PM
- Though Fortinet (NASDAQ:FTNT) beat Q3 estimates, it has guided in its earnings slides (.pdf) for Q4 revenue of $293M-$298M (+32% Y/Y at the midpoint) and EPS of $0.18-$0.19 vs. a consensus of $295.4M and $0.21. Expectations were high following July's strong results/guidance.
- Q3 billings totaled totaled $299.6M, +41% Y/Y, above revenue of $260.1M, and above guidance of $285M-$295M. Full-year billings guidance has been slightly upped to $1.215B-$1.22B (+36% at the midpoint) from $1.2B-$1.21B. At the midpoint, Q4 billings guidance of $364M-$369M implies a slowdown in growth to 30%.
- Billings growth led Q3 free cash flow to total $51.7M (well above net income of $24.1M), and the deferred revenue balance to rise 41% Y/Y to $706.9M.
- Fortinet has fallen to $37.95 after hours. Rival Palo Alto Networks (NYSE:PANW), which is also dealing with high expectations, is down 3.3%. FireEye (NASDAQ:FEYE) is down 2%, and CyberArk (NASDAQ:CYBR) down 1.8%.
- Fortinet's Q3 results, PR
Oct. 22, 2015, 4:20 PM
- Fortinet (NASDAQ:FTNT): Q3 EPS of $0.14 beats by $0.02.
- Revenue of $260.07M (+34.5% Y/Y) beats by $1.27M.
- Shares -19.24%.
Oct. 21, 2015, 5:35 PM
- ACTG, ALGN, ALTR, AMZN, ATHN, BAS, BCR, BJRI, BYD, CHE, COF, CYN, CYT, DV, EGHT, ETFC, FET, FII, FSL, FTNT, GHL, GIMO, GOOG, HBHC, HURN, IG, JNPR, LHO, LOGM, LSTR, MKTO, MSFT, MXIM, N, NTGR, P, PACB, PEB, PFG, QLGC, QLIK, QSII, RMD, SHOR, SIVB, SKX, SMCI, SPNC, SRCL, SWN, SYK, SYNA, T, TRN, UCTT, VRSN, WRE
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
Fortinet, Inc. provides threat management and 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. Its products and subscription services... More
Industry: Computer Peripherals
Country: United States
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