Thu, Jul. 23, 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.
Thu, Jul. 23, 9:15 AM
Wed, Jul. 22, 5:41 PM
Wed, Jul. 22, 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
Thu, Jul. 9, 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.
Mon, Jul. 6, 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.
Wed, Jun. 24, 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%.
Wed, Jun. 24, 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
Tue, Jun. 16, 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.
Fri, Jun. 5, 12:56 PM
- The PureFunds ISE Cyber Security ETF (HACK +2.2%) has made fresh highs after government officials disclosed a hack of the federal Office of Personnel Management (OPM) that resulted in the personal records of as many as 4M current and former federal workers being stolen. The Chinese hackers who carried out for a recent attack on health insurance firms Anthem and Premera Blue Cross are believed to be responsible.
- In addition to FireEye, Palo Alto Networks, and CyberArk (previously covered), gainers include Imperva (IMPV +3.7%), KEYW Holding (KEYW +7.5%), Fortinet (FTNT +2.3%), Proofpoint (PFPT +4.3%), Vasco (VDSI +3%), and Identiv (INVE +2.8%). Fortinet, Proofpoint, and Imperva have made new highs. The Nasdaq is close to breakeven.
- The group also rallied on Wednesday, a day after the IRS promised to upgrade its security systems during Senate hearings about a recent breach. Proofpoint is a day removed from announcing a refresh (version 3.0) of its threat-response/intelligence software platform. New features include better cloud-based threat intelligence tools and security alert integration for 3rd-party software tools.
Wed, May 27, 9:37 AM
- Fortinet (FTNT -1.4%) is acquiring Meru Networks (MERU +16%), a provider of enterprise Wi-Fi access points, controllers, and management software, for $44M in cash, or $1.63/share. The price represents a 17% premium to Meru's Tuesday close, and is equal to just 0.54x Meru's 2015 sales consensus of $81.3M.
- Fortinet, which already offers Wi-Fi access points and integrated Wi-Fi/security appliances, declares the deal "expands its opportunity to uniquely address the $5B global enterprise Wi-Fi market with integrated and intelligent secure wireless solutions." It also notes Meru's product line includes cloud/virtual Wi-Fi controllers (eliminates the need for dedicated hardware), and SDN-capable management and provisioning software.
- The deal is expected to close in Q3. Meru has been struggling to deal with competition from larger rivals such as Cisco and HP/Aruba Networks. The company announced a strategic review in January.
- Separately, Fortinet has launched FortiGuard Mobile, a subscription service that aims to protect phones/tablets from cyber threats, and which integrates with Fortinet's mainstay ForiGate unified threat management (UTM) appliances. Palo Alto Networks recently partnered with VMware to offer its own mobile security solutions.
Tue, Apr. 21, 1:35 PM
- Security tech firms are rallying once again (HACK +2.3%) after unified threat management (UTM) hardware leader Fortinet (FTNT +9.6%) beat Q1 estimates on the back of 36% Y/Y billings growth, and provided strong Q2 and full-year sales/billings guidance. At least 8 firms have hiked their Fortinet targets in response to the numbers, which followed a Q1 beat and in-line guidance from firewall vendor Check Point.
- In addition to FireEye, which announced an HP partnership this morning (follows a Check Point partnership), gainers include Palo Alto Networks (PANW +4.8%), CyberArk (CYBR +5.1%), Barracuda Networks (CUDA +5.1%), Qualys (QLYS +4.7%), Imperva (IMPV +2.2%), Proofpoint (PFPT +2.6%), and Zix (ZIXI +3.5%). Proofpoint and Zix report after the close, Barracuda on April 27, Qualys and Imperva on May 5, and CyberArk on May 7.
- "Fortinet is ... benefiting from a favorable security environment and increasing opportunity to sell to organizations that are building a multilayered approach to security," observes William Blair in remarks that also have implications for peers. "U.S. enterprise growth was 70% year-over-year with the company adding a total of 8,000 new customers, suggesting increasing traction." FBR (a long-time security tech bull) sees profit growth (currently pressured by heavy spending) improving as sales/marketing investments pay off.
- On the CC (transcript), CEO Ken Xie asserted Fortinet's ability to offer an integrated security platform covering "internal, data center, perimeter, and endpoint security plus advanced threat protection" was a differentiator. CFO Andrew Del Matto claimed FortiGate UTM/next-gen firewall appliance deals were over Palo Alto, Check Point, Cisco, and Juniper; those companies, of course, might claim wins of their own.
Tue, Apr. 21, 9:22 AM
Mon, Apr. 20, 6:10 PM
- On top of beating Q1 estimates, Fortinet (NASDAQ:FTNT) has guided in its earnings slides (.pdf) for Q2 revenue of $224M-$228M (+23% Y/Y at midpoint) and full-year revenue of $935M-$940M (+22% at midpoint), above consensus estimates of $222.1M and $926.1M.
- With heavy spending weighing on EPS, Q1 and full-year EPS guidance is respectively at $0.08-$0.09 and $0.51-$0.52 vs. consensus estimates of $0.11 and $0.50.
- With strong corporate security IT spending acting as a tailwind, Q1 billings totaled $254.3M, +36% Y/Y (much better than 26% revenue growth) and easily topping guidance of $226M-$230M. Q2 billings guidance is at $263M-$268M (+25% at midpoint), and full-year guidance at $1.105B-$1.12B (+24% at midpoint). Given Fortinet's history, the guidance might prove conservative.
- CEO Ken Xie is in a good mood. "Our first quarter billings growth was the highest since becoming a public company over five years ago ... we grew the number of large deals closed against competitors and added over 8,000 customers to our base of more than 200,000 ... we feel Fortinet's scale is starting to provide more of a competitive differentiator on multiple fronts."
- The billings growth resulted in the UTM hardware leader's deferred revenue balance rising 33% Y/Y to $600.2M. It also yielded free cash flow of $59.7M, well above net income of $13.5M. Operating expenses rose 40% Y/Y to $131.2M (outpaced revenue and billings growth), with sales/marketing spend accounting for $91.3M.
- FTNT +8.6% AH to $37.60, making new highs along the way.
- Q1 results, PR.
Mon, Apr. 20, 5:38 PM
Mon, Apr. 20, 4:21 PM
FTNT vs. ETF Alternatives
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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