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Fortinet Exhibits Momentum: Is it Part of Your Portfolio?

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Shares of Fortinet Inc. (FTNT - Free Report) have been trending upward on a year-to-date basis.

Fortinet’s network security solutions include firewall, VPN, application control, antivirus, intrusion prevention, web filtering, anti-spam and WAN acceleration.

Cyber security is becoming a mission-critical, high-profile requirement for the financial well-being, brand image and reputation of enterprises, and governments. Fortinet’s rich experience in the security space and continued delivery of mission-critical solutions will help it to maintain and grow market share. Gartner, which claims to have the “largest base of IT research analysts and consultants in the world,” projects global cybersecurity spending to grow by 7% in 2017 to reach $86.4 billion. Per Gartner’s another report, worldwide spending on IT security will reach $101 billion in 2018 from $75 billion in 2015.

These predictions bode well for the company’s diversified product portfolio for PCs, mobile and enterprise security. Furthermore, Fortinet has partnered with Exodus Intelligence, Cisco ACI, NTT Communications and VMware NSX Partner Ecosystem to provide best-in-class cyber security solutions to customers.

Furthermore, acquisitions are a major positive for Fortinet as these aid it to strengthen product portfolio and capabilities, consequently boosting top-line performance.

Fortinet is currently focusing on selling more subscription-based services. This unique business model is helping the company in generating stable revenues while expanding margins. Notably, 50% of the total revenues came from these services, which aided the company to generate an 80 basis-point gross margin expansion in second-quarter 2017. We believe that the strategy will continue to improve the top and bottom-line performances.

Risks Persist

Competition from key network security players such as Cisco Systems Inc. (CSCO - Free Report) , Check Point (CHKP - Free Report) , Juniper Networks (JNPR - Free Report) and Palo Alto Networks, remains a concern.

Our Take

We expect the aforementioned factors to help the company sustain strong momentum and stay afloat amid difficult times.

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