Great new book by Ted Koppel on vulnerability of utilities to evil hackers. State sponsored & criminal hackers are proliferating like termites. Stronger defenses needed. Companies like FTNT, FEYE, Palo Alto etc. should all be in great demand.
Sentiment: Strong Buy
What Fortinet needs is a better image to command better price premium for its solution. If based on $231m cost of revenue and using Checkpoint premium and Fortinet R&D, Fortinet should command at least $2b in sales and not a pathetic $770m. That's abt $1.23b or $7.15 rev/share down the drain for poor sales optimization. Fortinet is undervalued by undesirable management decision. After tax, the EPS should be above $4, and at abt PE 22 (ref - chkp), FTNT should be worth $88 per share.
Either Fortinet buck up and rectify its business, or allow itself to be acquired. If any big boys are looking at this and is confident that it has good brand premium, acquire Fortinet. Fortinet is being punished by lousy solution pricing even though it has great solutions and significant R&D in the growing cybersecurity market.
Checkpoint is delivering $3.64 EPS at $81.56, giving a PE of 22.4 (lower better). Fortinet is delivering only $0.10 at $34.10, giving a PE of 341. To meet CHKP PE, Fortinet needs to deliver $1.52 EPS or $244m of earnings.
Checkpoint generates $1.495b on $176m cost while Palo Alto generates $928m on $251m. Fortinet $770m on $231m. This show customers are willing to pay but Fortinet did not optimizes its margins. Unless Fortinet can show significant market share increase, I think the management need a good reminder by investors to beef up its sales and market so that it could capture that premium that should be commanded by R&D investments while cutting out at least a proportional expenditures. Fortinet should be a more responsible public listed company.
Use 1 month and switch on technical indicators - Money Flow Index, MACD, RSI and Stoch.
Looks like Fortinet is poised for a rebound when there is a favourable news - e.g. Increased EPS, major acquisitions gossips, upgrades from major analysts, increased 13F filings from major hedge funds, news on cyberattacks, bull runs from HACK or its composites, etc.
Sentiment: Strong Buy
Fortinet has been growing its revenue consistently but it needs to be more efficient in its expenditures. Still if revenue is still growing, Fortinet spending to grow market share and awareness is a positive sign for depressed EPS.
Sentiment: Strong Buy
Market Realist has been pumping the HACK ETF lately and from a post they put up on CHKP's board, FTNT had 4.98% of the assets in the fund. Checking with the HACK ETF as of yesterday FTNT equaled 2.78% of the Fund. with 9.5m shares worth about $30.5m. To get to %, even with the drop in price they must have dumped 5-6m shares. Maybe it starts going back up on outstanding fundamentals instead of nonsense from FEYE about the Chinese agreement with the US slowing down new deals. Yesterday Deutsch Bank met with FEYE's CFO and he said the problem was sales execution and a subscription renewals drop. FEYE is worthless - ambulance chasers.
Sentiment: Strong Sell
FTNT has a better product, and better management. FEYE will get crushed by PANW, FTNT and others. FEYE is not a good investment at this point….
Step 1. Signup for the PennyStock101 free newsletter and get there next trade alert tomorrow morning. Step 2. Comeback to the boards and thank me. Their last pick went up +54% in one day, and they have an even bigger one coming tomorrow. Just google'PennyStock101' best advide I can in this volatile market. Good luck to all!
The cybersecurity industry is big. From softwares to hardwares, from services to consulting , from projects to subscriptions. From anti-viral to UTMs. Companies do understand that any cyber threats DO affects bottom lines, and given more regulatory and privacy requirements, companies are investing money to protect their businesses.
Like any sectors with too many competitors, there will be consolidation. Maybe a Valeant in cybersecurity? I suspect is Symantec. Or Cisco, who is also constantly acquiring companies for their IPs. However, most cybersecurity companies are a little pricy, but I believe those concerns are defeated by the healthy industry growth. Sometimes it is better to swallow them up, before they swallow you in time to come. Growth engines are always expensive.
FEYE is just a trendier. However, I would compare Fortinet with Checkpoint and Palo Alto. Especially Checkpoint. Both Fortinet and Checkpoint share similar fundamentals, including no debts. Checkpoint has 50% more sales but worth 15b (FTNT hovers around 5-6b). Fortinet is not a young fledging startup, but established for more than a decade.
Fortinet is heavily invested in R&D and that its management are the pioneers in cybersecurity, thus they know what they are doing and investors have to be patient.
If there is one thing that I am amused is the company culture. It feels like Fortinet is in the 1990s. They are more nerdy than others. I like nerds, coz they always want to prove themselves technically.
Currently, I do hope that Fortinet do showcase more of their enterprise deals, which I believe will give investors more confidence. The NTT deal is good. I hope they do some PR with military BAE Systems for TalkTalk, which will open up global telco markets.
Overall, Fortinet is way undervalued largely because of its income to revenue, as compared with the others who has good margins. But remember, Fortinet has no debt, give no dividends, thus they have no financial obligations. And given the Xie brothers record, it is most likely that focus on long-term growth, sacrificing their margins to win market share. Research has shown that the cybersecurity market will be worth $170b by 2020. At just $1b sales for FY15 and trying to double its sales annually, they are striving for $32b in global sales thru enterprises, cloud & wireless markets. But I believe the more achievable target is $10b or abt 6-7% market share, unless they are looking to swallow complementary companies, to boosts its revenue, but given they invest so much in R&D, Fortinet will likely to grow organically, only acquiring companies that opens new portfolio than adding products that they already have and developing.
I HAVE A Q.: i'm DTer. but when FTNT fell by 20+% i established a long (swing) position averaging 36.05 per share. i must say i'm surprised--based on my view of the fundamentals--that a stock such as FEYE has outperformed FTNT for the past several days. how do these two stocks/companies compare? am i missing something??
A few days back, TalkTalk has approached BAE System about its cyber hacks. BAE is a partner of Fortinet. If this deal works out well, Fortinet solutions will be better recognized for the telco market.