Fortinet (FTNT) Sees Price Target Increase as Analysts Remain Bullish on Long-Term Potential

By Don Francis, Editor
February 10, 2024 11:33 AM UTC
Fortinet (FTNT) Sees Price Target Increase as Analysts Remain Bullish on Long-Term Potential

Truist Securities's Joel Fishbein raised their price target on Fortinet (NASDAQ: FTNT) by 33.3% from $60 to $80 on 2024/02/08. The analyst maintained their Strong Buy rating on the stock.

Fishbein's decision to hike the price target for Fortinet came after the company released its Q4 and FY 2023 earnings report on February 6, 2024. The analyst praised the company for delivering solid Q4 results, with billings up, driven by improved sales execution and early returns on its pivot to SASE (Secure Access Service Edge) and SecOps (Security Operations). Fishbein also highlighted Fortinet's balanced approach to growth and profitability, making it a "defensible long-term name."

Let's take a closer look at Fortinet's Q4 2023 results. The company reported earnings per share (EPS) of $0.51, beating the Zacks Consensus Estimate by 18.6% and surpassing Q4 2022's EPS of $0.44 by 15.9%. Service revenue for Q4 2023 stood at $927 million, up 24.8% from Q4 2022's $742.9 million. The total revenue for the quarter was $1.415 billion, beating the Zacks Consensus Estimate by 0.33% and exceeding Q4 2022's $1.28 billion by 10.3%. Fortinet also reported a gross margin of 78.5%, up 90 basis points year-over-year, and an operating margin of 32%.

For the full fiscal year 2023, Fortinet achieved an EPS of $1.63, representing a 37% increase from FY 2022's $1.19. The company reported revenue of $5.3 billion, a 20.1% increase from FY 2022's $4.42 billion. Service revenue for FY 2023 reached $3.38 billion, up 28.1% from FY 2022's $2.64 billion. Additionally, Fortinet reported billings of $6.40 billion, up 14.4% from FY 2022's $5.59 billion. The operating margin for FY 2023 was 28.4%, an improvement from FY 2022's 27.3%.

Looking ahead, Fortinet's management provided guidance for Q1 2024 and the full fiscal year 2024. For Q1 2024, the company expects an EPS of $0.37 to $0.39, revenue of $1.3 billion to $1.36 billion, and billings of $1.39 billion to $1.45 billion. The projected gross margin is between 76.5% and 77.5%, while the operating margin is expected to be between 25.5% and 26.5%. For the full fiscal year 2024, Fortinet anticipates an EPS of $1.65 to $1.70, revenue of $5.715 billion to $5.815 billion, and billings of $6.4 billion to $6.6 billion. The company projects a gross margin of 76% to 78% and an operating margin of 25.5% to 27.5%.

Founder, Chairman & CEO Ken Xie expressed confidence in Fortinet's performance in Q4, highlighting the growth in Security Operations billings and SASE billings. He attributed this success to the company's sales strategy shift and improved sales execution. Xie also emphasized Fortinet's platform strategy, which resonates with enterprises worldwide, as the company is a leader in Secure Networking and the number one firewall vendor for units shipped with FortiGates accounting for over half of the global deployment. Fortinet aims to consolidate the security capabilities of its over half a million customers onto its integrated FortiOS operating system, which spans on-premises and cloud environments.

In addition to Fishbein's rating update, several other analysts also revised their price targets for FTNT on February 7, 2024. Stifel Nicolaus's Adam Borg raised the price target from $52 to $78 while maintaining a Hold rating on the stock. Wells Fargo's Andrew Nowinski increased the price target from $65 to $70, also maintaining a Hold rating. BMO Capital's Keith Bachman raised the price target from $70 to $82, with a Hold rating.

According to WallStreetZen, 27.8% of top-rated analysts currently rate FTNT as a Strong Buy or Buy, while 66.7% see it as a Hold. Only 5.6% of analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that FTNT's upcoming year will deliver earnings per share (EPS) of $1.09. If the analysts' predictions hold true, FTNT's next yearly EPS will be down by 25.8% compared to the previous year.

Since FTNT's latest quarterly report on February 6, 2024, the stock price has increased by 4.4%. Year-over-year, the stock has risen by 21.8%. However, during this period, FTNT has slightly trailed behind the performance of the S&P 500, which has seen a 23.2% increase.

Truist Securities analyst Joel Fishbein, the author of the revised price target and rating, is ranked among the top 5% of Wall Street analysts by WallStreetZen. With an average return of 18.1% and a 69.7% win rate, Fishbein specializes in the Consumer Cyclical and Technology sectors.

Fortinet, Inc. is a cybersecurity solutions provider with operations across the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company offers a range of hardware and software solutions, including firewall, intrusion prevention, anti-malware, virtual private network, application control, web filtering, anti-spam, and wide area network acceleration. Fortinet's product portfolio also includes secure switching solutions, wireless networking solutions, centralized network logging and reporting solutions, endpoint protection, multi-factor authentication, web application firewall solutions, secure email gateway solutions, and endpoint protection solutions. The company caters to customers in various industries, including telecommunications, technology, government, financial services, education, retail, manufacturing, and healthcare.

Fortinet, Inc. was founded in 2000 and is headquartered in Sunnyvale, California.

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