Needham & Company Reiterated Buy on Fortinet (FTNT) Despite Competitor Downgrades
Needham & Company reiterated a Buy rating and $43.00 price target on Fortinet (NASDAQ: FTNT) following the company's 4Q earnings report. The stock has fallen from $42 in November to current $26 level, based on macro fears on security spending, the mishandled communication of SeptQ Meru revenue contribution, and also competitor downgrades. The CY16 outlook of $1250-1260m and $0.67-0.69 EPS are above the consensus $1248m and $0.67 EPS.
Analyst Scott Zeller commented, "The DecQ results for Fortinet were better than feared, as the company defied macro-concerns with 30%+ or better y/y growth in all the major geographies, and CY16 guidance is above consensus. DecQ, billings growth of +35% y/y was above consensus, and suggests continued strength in the field. Recently, the stock has fallen from $42 in November to current $26 level, based on macro fears on security spending, the mishandled communication of SeptQ Meru revenue contribution, and also our competitor downgrades. We believe FTNT. Despite the slowdown in Enterprise Datacenter (a disappointing +15% y/y growth), the strength in service provider powered results. Maintain BUY and $43 target, which is 5x EV/CY16 revenue."
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Shares of Fortinet closed at $26.36 yesterday.