Fortinet (FTNT Quick QuoteFTNT - Free Report) is currently one of the top-performing stocks in the technology sector. The stock price rally reflects the company’s robust fundamentals.

Therefore, investors should consider adding the stock to their portfolio to shrug off the prevailing highly volatile market environment and make some gains from its upside potential.

Here’s Why FTNT is an Attractive Pick

Share-Price Appreciation: Fortinet’s price trend reflects that the stock has had an impressive run on the bourse over the past one year. Shares of the company have gained 20.6% compared with the Zacks Internet – Software industry’s and the S&P 500’s growth of 14.8% and 13.9%, respectively, over the trailing 12 months.

Fortinet, Inc. Price and Consensus

 

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

Trading Way Below 52-Week High: FTNT stock currently trades lower than its 52-week high, which reflects its potential to go upward. The stock’s closing price of $74.31 on Jul 5 is 2.6% lower than the 52-week high of $76.27 attained on Jun 30, 2023.

Solid Rank & Growth Score: Fortinet currently has a Zacks Rank #2 (Buy) and a Growth Score of A. Our research shows that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities to investors. Thus, the company appears to be a compelling investment proposition at the moment.

Northward Estimate Revisions: Analysts have raised the estimates for 2023 and 2024 over the past 60 days, reflecting their confidence in the company. During the same period, the Zacks Consensus Estimate for 2023 and 2024 moved north by a penny and 3 cents, respectively.

Positive Earnings Surprise History: FTNT has an impressive earnings surprise history. The company outpaced estimates in each of the trailing four quarters, the average surprise being 16.4%.

Strong Earnings Growth Potential: The Zacks Consensus Estimate for 2023 earnings is pegged at $1.46 per share, suggesting year-over-year growth of approximately 22.7%. The consensus mark for 2024 earnings is pegged at $1.71 per share, indicating a year-over-year increase of 17.1%. Moreover, the long-term expected earnings growth rate for the stock is pegged at 18%.

Robust Fundamental Growth Drivers: Fortinet is benefiting from the increased adoption of its networking and security platforms amid the growing hybrid working trend. It continues to gain from robust growth in Fortinet Security Fabric, cloud and Software-defined Wide Area Network (SD-WAN) offerings. The cyber security firm is winning back-to-back deals for offering unique cyber safety solutions, which ensure the blocking of attacks or malicious content.

Per the International Data Corporation, Fortinet ranks third in Unified Threat Management (“UTM”) in terms of revenues and holds a market share of approximately 16.7% in the network security appliances market (as of September 2022). According to industry analysis, the category is believed to be one of the fastest growing segments in Network Security with projected growth in the range of high-single to low-double digits. Given the company’s sustained focus on enhancing its UTM portfolio through product development and acquisitions, we believe Fortinet will continue to increase its market share in the segment and retain its leading position.

Besides, the growing adoption of SD-WAN solutions stands as a key growth driver for FTNT in the long run. According to the latest Verified Market Research report, the market size for SD-WAN solutions is likely to reach $44.2 billion by 2030 from $2.8 billion in 2021, indicating a CAGR of 35.9% during the 2023-2032 forecast period. As there are only a few vendors that offer security and SD-WAN solution, Fortinet is well-positioned to capitalize on the increasing opportunities in the market.

On top of that, the company is currently focusing on selling more subscription-based services, which, in turn, are helping it to generate stable revenues while expanding margins. It is also bolstering the customer base of Fortinet.

In first-quarter 2023, the company’s revenues from the Services segment climbed 30.5% to $761.6 million. This was primarily driven by strong growth in its security subscription base. We believe that the subscription-based business model will continue to improve the company’s top and bottom-line performances in the near-term.

Other Stocks to Consider

Some other top-ranked stocks from the broader Computer and Technology sector are Salesforce (CRM Quick QuoteCRM - Free Report) , NVIDIA Corporation (NVDA Quick QuoteNVDA - Free Report) and Meta Platforms (META Quick QuoteMETA - Free Report) , sporting a Zacks Rank #1 at present. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Salesforce’s second-quarter fiscal 2024 earnings has been revised northward by a penny to $1.90 per share over the past 30 days. For fiscal 2024, earnings estimates have moved up by 2 cents to $7.44 in the past 30 days.

CRM's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 15.5%. Shares of the company have gained 21% in the past year.

The Zacks Consensus Estimate for NVIDIA’s second-quarter fiscal 2024 earnings has been revised southward from $1.97 to $2.04 per share over the past 30 days. For 2023, earnings estimates have moved up by 2.7% to $7.66 in the past 30 days.

NVDA's earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average surprise being 0.26%. Shares of the company have soared 166.8% in the past year.

The Zacks Consensus Estimate for Meta Platforms' second-quarter 2023 earnings has been revised downward by 5 cents to $2.82 per share over the past 30 days. For 2023, earnings estimates have moved south from $12.04 to $11.94 in the past 30 days.

META’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average surprise being 15.5%. Shares of the company have surged 70.9% in the past year.