Analyst Note| Malik Ahmed Khan |
We are maintaining our $68 fair value estimate for Fortinet after the company reported third-quarter financial results that topped our estimates on both the top and bottom lines. While this outperformance is commendable, we remain cognizant of the risks the firm faces, including elongated sales cycles amid a turbulent macroeconomic environment. We believe that Fortinet’s wide economic moat will allow it to navigate the near-term headwinds while continuing to benefit from secular trends such as vendor consolidation in cybersecurity. The shares were down more than 10% after hours after falling almost 6% during trading. We view Fortinet shares to be moderately undervalued, with the recent selloff providing long-term investors with a good entry point.