Why Fortinet Has More Upside, Even After 100% Rally YTD

Fortinet Inc.’s (NASDAQ: FTNT) strong execution is likely to continue in coming years, according to Stifel.

The Fortinet Analyst: Adam Borg initiated coverage of Fortinet with a Buy rating and a target price of $355.

The Fortinet Thesis: Despite the recent rally year to date, the stock valuation remains attractive, given that the company has several drivers to sustain “at least mid-to-high-teens” revenue growth, Borg said in the initiation note.

The analyst expects “ongoing strength across Fortinet’s FortiGate and non-FortiGate segments given Fortinet’s price and performance advantage.”

“This is enabling Fortinet to expand its footprint across new and existing customers as well as capture share from legacy vendors, a trend we expect to continue in coming quarters,” he added.

“Fortinet’s cloud portfolio is relatively less mature than competitors who aggressively expanded into the cloud in part due to M&A,” Borg wrote. He added, however, “Fortinet has not historically been a first mover, but is a relatively fast follower as it prioritizes internally-built, high-quality, and highly-integrated products (which have advantages over competitors with fragmented/non-integrated offerings).”

The analyst expressed optimism around Fortinet’s ability to “increasingly penetrate the cloud security market as it builds out its portfolio in coming years.”

FTNT Price Action: Shares of Fortinet had risen by 0.98% to $299.99 at the time of publication Tuesday.

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