‘Too Good to be True,’ ‘Blowout Results,’ ‘The Force is Strong’… Analysts Heap Praise on Fortinet While Mizuho Upgrades to Buy After Results
2022.05.05 16:41
‘Too Good to be True,’ ‘Blowout Results,’ ‘The Force is Strong’… Analysts Heap Praise on Fortinet (FTNT) While Mizuho Upgrades to Buy After Results
Shares of Fortinet (NASDAQ:FTNT) are up more than 7% in premarket trading Thursday after the company reported better than expected Q4 results and issued an upbeat FY forecast.
The company reported Q4 adjusted EPS of 94c, up from 81c in the year-ago period and above the consensus estimates of 80c. Revenue came in at $954.8 million in the period, up 34% YoY and above the analyst expectations of $886.1 million.
Billings totaled $1.16 billion in the quarter, up 36% YoY and topping the consensus projection of $1.08 billion. FTNT reported a Q1 adjusted operating margin of 22%, compared to 24.5% in the year-ago period and analyst expectations of 20%.
For Q2, FTNT expects adjusted EPS in the range of $1.05 to $1.10, while analysts were looking for $1.13 per share. Revenue is expected to range between $1.01 billion and $1.04 billion, compared to the expected $1.01 billion.
The company expects Q2 adjusted gross margin in the range of 74.5% to 76%, compared to the estimated 75.3%. FTNT sees billings in the range of $1.23 billion to $1.27 billion, compared to the expected $1.24 billion.
FTNT expects FY adjusted EPS in the range of $5 to $5.15, up from its previous guidance of $4.85 to $5, and beating the estimated $4.96 per share. The company expects FY revenue in the range of $4.35 billion to $4.4 billion, up from the previous forecast of $4.28 billion to $4.33 billion, while analysts were expecting $4.3 billion.
FY billings are expected in the range of $5.5 billion to $5.58 billion, up from $5.4 billion to $5.48 billion, and compared to the consensus estimates of $5.43 billion.
Mizuho analyst Gregg Moskowitz upgraded Fortinet to Buy from Neutral on the back of a strong beat & conservative raise. A new price target is $350.00 per share, up from $340.00.
“We remain confident that FTNT is very well positioned within network security, and that it will continue to take healthy market share. With the shares down 20% YTD and trading at a 4% CY23E FCF yield, we find the risk/reward attractive here,” the analyst said.
Morgan Stanley analyst Hamza Fodderwalla raised the price target to $330.00 per share from the prior $315.00 to reflect “blowout Q1 results.” The analyst reiterated an Equal Weight rating as supply chain uncertainty limits multiple upsides.
“Despite growing supply chain/macro uncertainty, Fortinet delivered a much stronger than expected Q1 result with product revenue and total bookings growth both accelerating to 50%+ YoY… We think the company can sustain 25%+ topline CAGR over the next 3 years (’21-24e) and expect updated LT target on Analyst Day next week to come in-line with that,” Fodderwalla said in a client note.
Raymond James analyst Adam Tindle reiterated an Outperform rating and a $337.00 per share price target on FTNT following “very strong results.”
“While the stock has underperformed YTD, we noted our checks were strong and remain impressed with the balance of growth and profitability amidst a di4icult supply (product and labor) environment… [We] await more catalysts for security subscription opportunities at next week’s analyst day, both of which should push the model toward further profitable growth and outperformance in the stock,” Tindle wrote.
By Senad Karaahmetovic
