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Solid IT Security Demand to Aid Fortinet's (FTNT) Q3 Earnings

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Zacks Equity Research
·3 min read
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Fortinet, Inc. FTNT is slated to report third-quarter 2020 results on Oct 29.

The company anticipates quarterly revenues of $630-$645 million. The Zacks Consensus Estimate for revenues is pegged at $638.8 million, calling for year-over-year growth of 16.7%.

Non-GAAP earnings per share are projected at 76-78 cents. The Zacks Consensus Estimate is pegged at 78 cents per share, indicating an increase of 16.4%, year on year.

The company’s earnings surpassed the consensus mark in all of the trailing four quarters, the average surprise being 18.6%.

Let’s see how things have shaped up for the upcoming announcement.

Factors at Play

Fortinet’s third-quarter performance is expected to have benefited from robust momentum in FortiGate virtual machines, which is driving its private and public cloud billings.

Fortinet, Inc. Price and Consensus

Fortinet, Inc. Price and Consensus
Fortinet, Inc. Price and Consensus

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

Moreover, a huge global workforce has been working remotely in a bid to contain the spread of coronavirus. However, more people logging into employers' networks implies a greater need for security. This trend might have spurred demand for Fortinet’s products during the quarter under review.

The rapid adoption of FortiGate-based secure SD-WAN offerings is likely to have aided the company’s Product segment. The Zacks Consensus Estimate for Product revenues in the September-end quarter is pinned at $217 million, suggesting 10.2% year-over-year growth.

Also, FortiGuard security subscriptions and FortiCare technical support services are likely to have maintained solid traction, supporting the company’s Services segment. The Zacks Consensus Estimate for quarterly Services revenues is pinned at $421 million, calling for 20.3% year-over-year growth.

Besides, the company is expected to have benefited from its IoT offering with the Forti- ASIC SPU technology, which provides a cost and performance advantage over its competitors.

What Our Model Says

Our proven model predicts an earnings beat for Fortinet this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Fortinet currently carries a Zacks Rank of 2 and has an Earnings ESP of +1.89%.

Other Stocks With Favorable Combinations

Here are some other companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming releases:

Vishay Intertechnology, Inc. VSH has an Earnings ESP of +6.45% and flaunts a Zacks Rank of 1, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alphabet GOOGL has an Earnings ESP of +7.40% and carries a Zacks Rank of 2, currently.

AMETEK, Inc. AME has an Earnings ESP of +0.83% and currently carries a Zacks Rank of 3.

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