Fortinet (FTNT) Posts Big Q3 Numbers on Strong Demand; Analysts Weigh In

Following a Fortinet Inc. (Nasdaq: FTNT) big third quarter earnings win today, shares surged over 20% to a new 52-week high of $29.75.

The company reported a third quarter EPS of $0.17 excluding certain items, beating the analyst consensus of an EPS of $0.11. The number was 21.4% better than their non-GAAP EPS of $0.14 reported for the same period last year.

Revenues for the company also increased 29% to $85 million year-over-year, edging out the consensus of $76.94 million in revs.

Analysts weigh in on the win:

• Deutsche Bank said that the numbers reinforced their conviction that "Fortinet is well positioned to benefit from pent up demand for an integrated security solution and strength of proprietary UTM technology." DB says that Fortinet continues to move along in a high organic trajectory, specifically, "The recent enterprise deal wins against larger competitors including Cisco, Juniper and Check Point highlight its metamorphosis from an SMB focused vendor to a growing enterprise player." They reiterated their Buy rating, and increase their price target from $30 to $32.
  
  
• Wedbush notes that Q3 results came in above their estimates for billings, revs, free cash flow, and EPS. Wedbush commented that, "we believe demand is being driven by customer need to replace old security equipment and to consolidate multiple functions on to a single platform. We believe there remains upside to current estimates given the enterprise and service provider opportunity as well as the accelerating mix shift to high end appliances." They are increasing their estimates, FY10 revs increase from $308 to $318 million and EPS boosted from $0.42 to $0.50. FY11 revenue outlook is now increased from $350 million to $373 million, with an EPS increase from $0.54 to $0.60. They maintain their Outperform rating, and increase their price target from $28 to $30.
  
  
• Well Fargo also concedes that Fortinet beat all of their estimates, including billings, EPS, and Q410 outlook. They now see Q410 revs up from $80.9 million to $85.4 million, with an EPS increased from $0.11 to $0.13. FY10 revs go from $303.8 million to $316.5 million, and EPS increased from $0.40 to $0.49. For FY11 Wells increased their outlook from $343.3 million in revs and an EPS of $0.55 to revs of $364.2 million and an EPS stationary at $0.55.
  
  Wells said that revenue growth was driven by strength in products, which grew 40.6% over the period. In particluar, large deals, highend products, and a higher product mix led the growth.
  
  Wells has a Market Perform rating with a valuation range of $23 - $25 on the stock.

Shares of Fortinet are up 19.4% into the close today.

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