Fortinet's Billings Miss Stands In Contrast To Results From Peers

Following Fortinet Inc (NASDAQ: FTNT)'s negative pre-announcement, Barclays said its 7–8 percent billings miss amid healthy results from peers such as Palo Alto Networks Inc (NYSE: PANW) and Barracuda Networks Inc (NYSE: CUDA) will raise questions, both competitively and strategically.

More Clarity On Competition Sought

Analyst Saket Kalia said he wishes to have more information on competition on the earnings call, given the strong results of Palo Alto Networks and Barracuda Networks in the August quarter. Fortinet had blamed the shortfall on sales force changes, longer enterprise cycles and macro factors.

Related Link: Fortinet's Q2 Challenges Carry Over To Q3

Product Vs. Subscription Breakup

Going by the billings and revenue shortfall predicted by the company, Barclays sees a bigger miss on subscription/maintenance billings than on product. Accordingly, the firm lowered its out year revenues estimates. The firm surmises that a range of factors, including duration, renewal rate and attach rate, could have driven the downside.

Weakness Creates Entry Point?

Barclays noted that in the past, negative pre-announcements had created attractive entry points. Nevertheless, the firm feels questions concerning what will happen will rage until the earnings release.

Barclays lowered its estimates for the company and reduced its price target for the shares of the company to $34 from $42.

At last check, Fortinet's shares were down 12 percent at $30. Palo Alto shares were down 1.2 percent at $153.61. Contrastingly, Barracuda shares were up 10.22 percent at $25.67.

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