Fortinet (FTNT): Fundamentals Weaker Than Headline - Oppenheimer
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Rating Summary:
24 Buy, 30 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 11
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Oppenheimer analyst, Shaul Eyal reiterated his Outperform rating on shares of Fortinet (NASDAQ: FTNT) but noted that the metrics behind the headline numbers were weaker than the upside would suggest. While FTNT exceeded 2Q results (revenue & billings) and raised FY16 guidance, it came in short on product revenue ($136.6M vs. consensus' $139.1M) due to a shift in business model toward a subscription-driven one. Consistent with the analyst's channel checks, the business was extremely back-end loaded and more work is needed to improve its North American sales operations vs. stellar EMEA & APAC performance. Indicative of the tight linearity and coming against toughest comps YoY, AR rose (20.4% of revenue vs. 18.4% in 2Q15), driving up DSO (74 vs 66 in 2Q15) and impacting CFFO ($67.9M vs consensus' $89.6M).
The analyst summed up his sentiment succinctly noting that this was "not the quarter to write home about yet demand trends remain healthy:. With that, he reduced his PT to $45 from $50.
For an analyst ratings summary and ratings history on Fortinet click here. For more ratings news on Fortinet click here.
Shares of Fortinet closed at $37.17 yesterday.
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