Wedbush Downgrades Fortinet (FTNT) to Neutral; Risk/Reward Less Attractive Given Lagging Billings Growth
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Price: $160.01 -3.28%
Rating Summary:
22 Buy, 34 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
22 Buy, 34 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Wedbush downgraded Fortinet (NASDAQ: FTNT) from Outperform to Neutral, price target lowered by $1 to $23.00.
Wedbush analyst says, "We are downgrading Fortinet to due to a lower risk-reward profile given moderating billings growth which is translating to decreased visibility and lower FCF, therefore making a premium valuation less sustainable, in our view. Despite Q3 results which were above expectations for revenue, GM, OM, and EPS, the main disappointment in the quarter was billings growth which significantly lagged behind strong product revenue growth due to numerous factors including the impact of new revenue-recognition rules, a mix shift to shorter-term service contracts, increased preference in the carrier market for appliance-only deals, inventory shortages which prevented shipments, and a lower number of service renewal opportunities due to strong multi-year renewals last year." (Wedbush raises FY11 EPS estimate from $0.36 to $0.43 and FY12 from $0.42 to $0.47)
For more ratings news on Fortinet click here and for the rating history of Fortinet click here.
Shares of Fortinet closed at $19.12 yesterday.
Wedbush analyst says, "We are downgrading Fortinet to due to a lower risk-reward profile given moderating billings growth which is translating to decreased visibility and lower FCF, therefore making a premium valuation less sustainable, in our view. Despite Q3 results which were above expectations for revenue, GM, OM, and EPS, the main disappointment in the quarter was billings growth which significantly lagged behind strong product revenue growth due to numerous factors including the impact of new revenue-recognition rules, a mix shift to shorter-term service contracts, increased preference in the carrier market for appliance-only deals, inventory shortages which prevented shipments, and a lower number of service renewal opportunities due to strong multi-year renewals last year." (Wedbush raises FY11 EPS estimate from $0.36 to $0.43 and FY12 from $0.42 to $0.47)
For more ratings news on Fortinet click here and for the rating history of Fortinet click here.
Shares of Fortinet closed at $19.12 yesterday.
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