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Fortinet to Secure Canadian Government's Perimeter Services

Zacks Equity Research

Fortinet FTNT recently announced that it will secure the Enterprise Perimeter Services for the Government of Canada’s Shared Services Canada (“SSC”).

Reportedly, the company will provide cloud and data center services to SSC and its clients to protect the Internet edge, with more than 100 Gbps (Gigabytes per second) of scalable threat protection.

The SSC was created by the Government of Canada to transform the management and security of its IT infrastructure.  In 2016, Fortinet was chosen by the SSC to secure the government’s IT infrastructure.  Fortinet’s success with the Security Fabric Architecture prompted the SSC to sign another contract with the company for more security services.

The recent deal strengthens the Fortinet Security Fabric as a preferred comprehensive security services platform for private and government enterprises alike.

Fortinet, Inc. Price and Consensus

Fortinet, Inc. Price and Consensus

Fortinet, Inc. price-consensus-chart | Fortinet, Inc. Quote

Surging Demand for Cybersecurity in the Federal Space

With the introduction of emerging technologies, the federal government is constantly enhancing its digital footprint. However, as the amount of data continues to increase, the number of vulnerabilities in the government’s networks is also on the rise, threatening national security, public safety and civilian services. Therefore, federal government agencies require cost-effective and comprehensive cybersecurity solutions.

To address this concern, Fortinet launched its subsidiary Fortinet Federal, dedicated to serving the security needs of governments through its Security Fabric architecture.

Notably, per a Deloitte-NASCIO cybersecurity study of leading IT security officers in 50 states conducted last year, nearly half of the states do not have a separate cybersecurity budget and more than a third have seen no growth or reduction in those budgets.

However, in November 2018, President Trump passed a law establishing the first agency devoted to defending U.S. infrastructure from both cyber and physical attacks. This has brightened Fortinet’s prospects in the space.

Moreover, in November last year, more than 50 additional Fortinet Security Fabric solutions achieved the Department of Defense Information Network (DoDIN) Approved Products List certification. This enabled the certified products to be sold to DoD agencies.

Growing Adoption of Security Fabric Architecture

Fortinet’s Security Fabric is gaining strong traction among enterprises led by digital transformation across most industries. As enterprises are transitioning their workloads to the cloud, they are becoming increasingly aware of the security gaps that may arise in a multi-cloud environment, and the implications on business.

Recently, Fortinet announced that its multi-cloud security offerings have been adopted by Nubank, Aspire Global, MediaKind, and MLP Finanzberatung SE to improve their cloud environments with secure connectivity and consistent visibility and control.

Further, the company announced three more key customers in its Fabric-Ready Partner program — RAD, Indegy and SecurityMatters. Notably, the program already includes Amazon’s AMZN cloud division AWS and Nozomi Networks.

Moreover, more than 50 of the company’s solutions in the Security Fabric suite were approved by Department of Defense Information Network last year.

Per Gartner, 50% of enterprises will unknowingly directly expose some of their IaaS storage services, network segments, applications or APIs to public by 2021, up from 25% in 2018. This projection reflects the dire need of strong multi-cloud security offerings, which will cover all security gaps.

With the global IT spending on “Security Technology” projected to exceed $124 billion in 2019 by Gartner, Fortinet’s near-term prospects look bright as this spells rise in sales of security products.

Competition in Cloud Security a Concern

Fortinet faces competition from numerous players in the security application market. In the multi-cloud security space, its most notable rivals are Palo Alto PANW and Cisco CSCO.

Palo Alto recently acquired container security company Twistlock, and serverless security firm PureSec, to better protect customers’ journey to the cloud. The company also introduced its comprehensive cloud security suite Prisma. These proposed buyouts are expected to further boost its cloud security suite.

Cisco’s cloud security solutions are also gaining significant momentum due to various efforts to boost business. Notably, in October last year, Cisco acquired Duo Security to enhance its cloud security portfolio.

However, we believe that Fortinet’s robust steps to maintain stronghold in the cybersecurity market, and the growing success of the Security Fabric among private and public enterprises, position it comfortably amid intense competition.

Fortinet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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