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
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%.
Fri, May 29, 4:51 PM
- Though it barely budged at first after posting an FQ3 beat and reporting 56% Y/Y billings growth on Wednesday afternoon, Palo Alto Networks (NYSE:PANW) has gradually rallied to new highs since; shares were up 1.9% today in spite of lower markets. As was the case following its FQ2 beat, plenty of sell-side firms have hiked their targets.
- "We believe PANW is the premier name in network security and a core holding," writes Pac Crest's Rob Owens (target hiked to $180). He forecasts 2017 free cash flow of $600M (implies a still-lofty 23x forward multiple), and predicts both the CirroSecure acquisition and the recently-announced AutoFocus cyber threat intelligence service will boost future subscription growth.
- Oppenheimer's Shaul Eyal (target hiked to $180): "Numerous factors remain powerful drivers relating to our bullish thesis: 1) Continued acceptance of its high-end appliances (PA-7050 & 3060), 2) Stellar growth in recurring subscription revenue (contributing to better margins), 3) Upward revised guidance, 4) Continued scaling of the business supported by its commitment to exit FY16 with operating margins in the low-20% area."
- Morgan Stanley's Keith Weiss notes 13% of surveyed chief information security officers (CISOs) reported Palo Alto was their primary firewall vendor, and sees that figure rising to 23% during the next cycle. He adds the average customer "has increased their product spend with PANW by 12% over the past year.”
- On the CC (transcript), Palo Alto stated customers for its WildFire threat-detection service rose by ~1K Q/Q to over 6K, and that it has "sold multiple millions of dollars' worth" of subscriptions for its Traps endpoint security service (launched last fall). 750+ customers have requested to join an AutoFocus test program ahead of the service's general availability this fall.
Tue, May 5, 10:32 AM
- Though Qualys (QLYS -28.8%) beat Q1 EPS estimates and only slightly missed on revenue, it's guiding for Q2 revenue of $39.5M-$40M and EPS of $0.09-$0.11, below a consensus of $40.7M and $0.13. Full-year guidance is for revenue of $165M-$166.5M and EPS of $0.50-$0.55 vs. a consensus of $168.4M and $0.53.
- Security tech peers are underperforming (HACK -2.9%) amid a 0.8% drop for the Nasdaq. Decliners include CyberArk (CYBR -3.6%), FireEye (FEYE -2.5%), Palo Alto Networks (PANW -2.9%), Proofpoint (PFPT -3.8%), and AVG (AVG -2.3%).
- Discussing its light full-year outlook, Qualys says it now expects "a lower growth rate for our Vulnerability Management business than we did at the beginning of 2015" The growth rate for other products is said to be unchanged.
- On the CC (transcript), Qualys noted Vulnerability Management (provides cloud-based tools for detecting and fixing IT vulnerabilities) still accounts for nearly 80% of revenue, and that business' Y/Y sales growth slipped to 19% in Q1 from 20% in Q4 thanks to "the timing of a few large enterprise deals." With shares up over 3x from their 52-week lows going into earnings, there was little margin for error.
- Baird has gone contrarian and upgraded Qualys to Outperform following the rout. Baird, which maintains a $50 target, sees new products/services will boost growth. Qualys launched a cloud-based IT asset monitoring service last month, as well as a service for securing Web apps.
- FireEye and CyberArk are giving back some of the big Friday gains seen following FireEye's Q1 beat and full-year guidance hike.
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.
Mon, Apr. 13, 4:44 PM
- A Q1 Piper survey of security resellers found of 54% of Palo Alto Networks (NYSE:PANW) resellers stating their sales were above plan during the quarter, the highest figure among 10 covered firms. 19% were below plan, and 27% in-line.
- Piper notes Palo Alto's above-plan reading was its highest since Q4 2013, and that it also "had the highest percent of resellers expecting above normal seasonality in Q2 (June) with 60 percent."
- FireEye (NASDAQ:FEYE) had the second-best numbers: 43% of resellers were above plan, 21% below, and 36% in-line. 20% expect Q2 to be above normal seasonality. Barracuda (NYSE:CUDA) was third on Piper's list with 25% above plan, 13% below, and 63% in-line.
- ProofPoint (NASDAQ:PFPT) was a laggard: 56% of resellers were below plan, 44% in-line, and none above. Moreover, the net difference between above-plan and below-plan resellers (-56%) represented a sharp reversal from Q4's +20%. A silver line: 33% of resellers expect above-normal Q2 seasonality.
- Fortinet (NASDAQ:FTNT) was also soft: 13% of resellers were above plan vs. 38% below and 50% in-line. Its net difference fell to -25% from Q4's +6%. Imperva (NYSE:IMPV) had 29% below plan, 71% in-line, and none above; however, its net difference (-29%) was only a little worse than Q4's -20%.
- ProofPoint fell 6.6% today, and Fortinet fell 3.8%. But other security tech plays also sold off. FireEye fell 3.2%, giving back some of the Friday gains seen in anticipation of a 60 Minutes appearance. Symantec (-25% net difference in Piper's survey) fell 5.7% as more details emerged about the company's reported efforts to sell its storage software unit (led shares to spike on Friday).
- Palo Alto fell 1.9%, giving back some of its recent gains. Imperva avoided the selloff, closing down just 0.2%.
- ETF: HACK
Wed, Apr. 1, 2:57 PM
- Several security tech plays are seeing profit-taking on a down day for tech. Palo Alto Networks (PANW -4.3%), FireEye (FEYE -3.4%), Imperva (IMPV -3.5%), Fortinet (FTNT -3.1%), and Proofpoint (PFPT -3%) are the biggest decliners.
- The decline comes as Pres. Obama announces an executive order authorizing "targeted sanctions against individuals or entities whose actions in cyberspace result in significant threats to the national security, foreign policy, economic health or financial stability of the United States."
- Obama, whose administration has already rolled out several executive actions/proposals aimed at helping businesses and government agencies defend against security breaches, goes as far as to call cyberattacks a "national emergency." His latest move comes 3 months after a massive Sony Pictures hack blamed on North Korea.
- ETF: HACK
- Yesterday: Palo Alto expands VMware alliance, launches new service
Fri, Mar. 27, 3:12 PM
- Today's notable tech gainers include next-gen firewall leader Palo Alto Networks (PANW +3.5%), touchscreen tech developer UniPixel (UNXL +5.9%), solar microinverter leader Enphase (ENPH +5.8%), optical transport/switching hardware vendor Infinera (INFN +3.8%), telecom service/analytics provider Neustar (NSR +4.4%), and Chinese online classifieds leader 58.com (WUBA +4%). The Nasdaq is up 0.3%
- There are relatively few major decliners today. The group includes Infinera rival Ciena (CIEN -4.5%), Chinese sports lottery site 500.com (WBAI -5.3%), and Chinese online video leader Youku (YOKU -3.4%).
- Palo Alto is adding to Thursday gains seen amid a broader cybersecurity stock rally. Likewise, Enphase gained on Thursday following rival SolarEdge's IPO, Neustar gained after announcing a $150M buyback, and Infinera gained following a bullish MKM note.
- Ciena is reversing the Tuesday gains seen after Stifel reported the company's share of a major Verizon 100G metro contract (has been officially announced) could be larger than expected. 500.com is giving back major Thursday gains; yesterday morning, SA Instablog author/former i-banker MNS Global reported hearing Chinese authorities are thinking of indefinitely extending recently-placed bans on online sports lottery sales, after uncovering corruption.
- Previously covered: EMC, HP, Voxeljet, Skyworks, SuperCom, Stratasys, Qunar, Pandora, SanDisk
Thu, Mar. 26, 2:44 PM
- Though the Nasdaq is nearly flat today, many security tech plays are rallying. CyberArk (CYBR +4.6%) is a standout, adding to Monday's post-lockup gains. So are Qualys (QLYS +4.7%), Vasco (VDSI +3.8%), and Proofpoint (PFPT +4.3%). Palo Alto Networks (PANW +1.8%), Fortinet (FTNT +1.9%), and Imperva (IMPV +2.2%) are up more moderately.
- Possibly helping the group: The House Intelligence Committee has unanimously passed a cybersecurity bill that will make it easier for companies to share information about attacks without risking lawsuits. A full House vote could happen by late April, and the Senate is working on a similar bill. The White House recently floated its own cybersecurity initiatives.
- Yesterday, FBR's Daniel Ives (bullish on the space for some time) forecast spending on "next-generation" security solutions will rise 25% this year, up from a prior 20% estimate. He thinks less than 10% of companies have fully invested in next-gen offerings, and sees evidence of a "surge in deal flow with a major upgrade cycle underway in 2015, as enterprises and governments 'fast track' cybersecurity initiatives across the board."
- Ives expects FireEye (FEYE +0.7%), Palo Alto, Fortinet, and Proofpoint to benefit from the trend, which he isn't sqeamish about hyping. "This once-in-a-multi-decade upgrade opportunity is poised to be a rising tide for all security boats ... with legacy security solutions no longer 'good enough' and next-generation products well positioned to replace traditional firewall and endpoint vendors over the coming years."
- ETF: HACK
- Previously: Three cybersecurity companies reportedly planning $1B+ IPOs
Tue, Mar. 10, 2:55 PM
- Security tech plays, several of which were huge gainers in February, have been hard hit (HACK -2.6%) amid a market selloff. Major decliners include FireEye (FEYE -4%), CyberArk (CYBR -6.6%), Proofpoint (PFPT -4.7%), and Vasco (VDSI -5.5%). Imperva is off sharply after announcing a 3M-share offering.
- FBN Shebly Seyrafi reiterated his bullish stance on the group today, forecasting security IT spend will grow 14% this year (up from 2014's 11%). Palo Alto Networks (PANW -0.5%) and Fortinet (FTNT -2.4%) are his favorites due to positive checks, but he also likes other names, mentioning FireEye and Check Point (CHKP -0.2%) in particular. Palo Alto and Check Point are seeing only modest losses.
- Earlier today, Check Point launched Threat Extraction, a malware-protection tool that proactively extracts and reconstructs documents traveling over a network with known safe elements (so as to remove the threat of malware). The product launch, which furthers Check Point's efforts to grow its software exposure, follows the company's purchase of threat-prevention software startup Hyperwise.
Mon, Feb. 23, 11:52 AM
- With shares having more than doubled in February as of Friday's close, JPMorgan has downgraded CyberArk (CYBR -11.8%) to Underweight, and is reiterating a $42 target.
- JPMorgan: "Closing at just over $70 the stock is trading at roughly 9.7x our best upside scenario for 2016 revenue that we outline (…) It is not that we think the company cannot reach these estimates, but rather this level of upside appears to already be factored into the stock at these levels."
- Security tech peers FireEye (FEYE -4.4%), Palo Alto Networks (PANW -2.4%), Imperva (IMPV -3.8%), and Vasco (VDSI -3.1%) are following CyberArk lower. The group has rallied strongly in recent weeks.
Fri, Feb. 20, 4:42 PM
- With the help of strong earnings reports, government initiatives, and ongoing hacking scandals bolstering broader corporate interest in cybersecurity, security tech plays are refusing to take a breather. CyberArk (CYBR +9.4%), FireEye (FEYE +4.2%), Imperva (IMPV +8%), Palo Alto Networks (PANW +2.7%), Barracuda (CUDA +3.9%), and Vasco (VDSI +3.6%) were all standouts today.
- CyberArk is now up 93% since Feb. 9, thanks in no small part to its Q4 numbers. FireEye is up 29% since beating Q4 estimates and reporting strong billings on Feb. 11.
- The PureFunds ISE Cyber Security ETF (NYSEARCA:HACK) is up 17% in February.
Fri, Feb. 13, 2:50 AM
- President Obama is poised to sign an executive order today aimed at encouraging companies to share more information about cybersecurity threats with the government and each other.
- The order will set the stage for new private-sector led information sharing and analysis organizations, called ISAOs, where companies share cyber threat data with each other and the Department of Homeland Security.
- The move comes as big Silicon Valley companies prove hesitant to fully support more mandated cybersecurity information sharing without reforms to government surveillance practices.
- KEYW, CUDA, PFPT, FEYE +0.5%, PANW +1.3%, QLYS +3% CYBR +18.5% AH
- ETFs: HACK +4.7% AH
Mon, Jan. 12, 1:33 PM
- The White House has disclosed Pres. Obama will outline this week "a series of legislative proposals and executive actions that will be in his [Jan. 20] State of the Union that will tackle identity theft and privacy issues, cybersecurity, and access to the Internet."
- Several security tech plays, some of whom received a lift last month from the Sony hack and its fallout, are higher in spite of a 0.9% Nasdaq drop. FEYE +4.5%. CUDA +6.9%. PANW +1.2%. CYBR +1.7%. PFPT +1.3%.
- The gains come on a day in which the U.S. Central Command's (CENTCOM) Twitter and YouTube accounts have been hacked by ISIS supporters.
- ETFs: HACK
Dec. 18, 2014, 11:13 AM
- FireEye (FEYE +4.9%), recently hired by Sony to probe its massive hacking incident, is rallying strongly on an up day for equities after Sony cancelled The Interview's release in response to the hack and subsequent threats on movie theater chains.
- Other security tech names are also outperforming: PANW +3.2%. KEYW +3.9%. FTNT +2.6%. PFPT +3.2%. Imperva (IMPV +2.6%) is adding to the Wednesday gains it saw following a Deutsche upgrade.
PANW vs. ETF Alternatives
Palo Alto Networks Inc offers an enterprise network security platform that allows enterprises, service providers, and government entities to secure their networks and safely enable applications running on their networks.
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