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Fortinet Inc FTNT

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Morningstar’s Analysis

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Fortinet’s Q2 Is Another Blowout Quarter With Robust Outlook; Raising FVE to $200

Mark Cash Senior Equity Analyst

Analyst Note

| Mark Cash |

We are raising our fair value estimate for narrow-moat Fortinet to $200 from $185 after its second quarter easily topped our expectations for sales growth. Our estimations for future growth were raised while we still expect an already strong operating profile to gradually expand. We believe Fortinet is well positioned as security undergoes a change from relying on siloed, well-defined perimeters to a more holistic approach that covers various threat vectors. Fortinet should continue succeeding as it blurs the lines between security and networking while also benefiting from organizations consolidating their security spending toward its security fabric platform. While we are hard-pressed to find any negativity in the quarter or guidance, we are more cautious about the possibility of continued torrid growth over the long term and would wait for a pullback with shares trading around $270.

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Company Profile

Business Description

Fortinet is a cybersecurity vendor that sells products, support, and services to small and midsize businesses, enterprises, and government entities. Its products include unified threat management appliances, firewalls, network security, and its security platform, Security Fabric. Services revenue is primarily from FortiGuard security subscriptions and FortiCare technical support. At the end of 2019, products were 37% of revenue and services were 63% of sales. The California-based company sells products worldwide, with the Americas representing 43% of sales in 2019.

899 Kifer Road
Sunnyvale, CA, 94086
T +1 408 235-7700
Sector Technology
Industry Software - Infrastructure
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2019
Stock Type Aggressive Growth
Employees 9,043