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The bull case for Fortinet Inc (NASDAQ: FTNT) is based on firsthand checks and conversations that point to a faster-than-expected recovery, according to Goldman Sachs.
The Fortinet Analyst: Brian Essex upgraded Fortinet from Neutral to Buy with a price target lifted from $143 to $150.
The Fortinet Thesis: Conversations and checks with industry participants suggest recent challenges in large enterprise markets are "abating" sooner than expected, Essex said a Tuesday upgrade note.
Goldman's CIO survey suggests improving firewall demand through the end of 2020, while another survey indicates "signs of follow-through," the analyst said.
Related Link: Benzinga's Top Upgrades, Downgrades For October 20, 2020
Fortinet's WAN Edge infrastructure market share stood at 10% in the second quarter, making it the third-largest vendor by market share, he said.
The integration of Fortinet's security capabilities along with SD-WAN architecture helps enterprises put secure networking in place at a lower cost, Essex said.
Fortinet's acquisition of OPAQ Networks is a "strategic positive," the analyst said.
Fortinet could leverage the newly acquired technology through its service provider installed base, he said, adding that this represents a potential catalyst that is being overlooked by the market.
Fortinet's stock is trading at 22.3 times EV/NTM FCF versus the security software average of 23.9 times, Essex said.
Fortinet's discount to the group represents an "attractive entry point," and the company has multiple drivers to justify a higher valuation, according to Goldman Sachs.
FTNT Price Action: Shares of Fortinet were trading higher by 2.83% to $132.46 at last check Tuesday.
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