December 4, 2013
Fortinet sell-off overdone, says UBS
UBS said the sell-off in Fortinet is overdone on the CFO/COO departure. The firm said there are no fundamental issues at Fortinet and the departure is most likely a disagreement on strategy.
The firm believes Fortinet is well positioned for growth and could be worth $25-$29 per share to a strategic buyer. Shares are Buy rated
Sentiment: Strong Buy
I expect more upgrades will be coming as analysts make their picks for 2014. FTNT seems like a no brainer as the stock is selling at a 15% discount after announcing good earnings. When you throw in the fact that they are on the cutting edge of the security market at a time when security breaches are becoming quite common, you have a double reason to jump on board. IMHO.
The knock on this stock has always been the lack of management focus on operational issues, not the products. This is one of those all too common situations where a company manages to grow in spite of itself. The existing management is great for the technology, R&D and understanding of the competitive issues. But the existing management is horrendous at the operations, the supply chain, the predicting and forecasting of sales and revenue.
Until the operational side of FTNT is fixed I can't see this stock overcoming its discount. Under Ken G and Ahmed R this was getting fixed. Now, to quote Yogi Berra, "it's deja vu all over again".
lol.......no way the company sells for $25-29. It will be in 30's at a minimum. In UTM....they are #1....BEST OF BREED. For a large multinational....this is worth a large premium. barney
Would be a good move to beef up RSA but they don't do acquistions bigger than $2b to $2.5b ... None were larger than that ... RSA, Legato, Documentum, VMWare, ... None were outside of this band.
A $4.5b to $5b acquisition the size of what FTNT would be taken out at is a fairly large and very rare transaction in the tech industry. Not saying it can't or won't happen but it isn't common. And only a few players have the pockets or expertise to pull this off. It is a short list.
It is several days after the CFO left. By now the market knows what the reason is, all these recent upgrades suggest that the sell off was likely not justified.
Company has half a billion in cash alone, great buy to end the year.