Fortinet (FTNT Quick QuoteFTNT - Free Report) stock has made a remarkable comeback this year after a massive sell-off in 2022. With a year-to-date (YTD) rise of 64.2%, FTNT stock has more than offset last year’s decline of 32% in its share price.

The Fortinet stock has outperformed broader equity indexes, Nasdaq Composite, The Dow Jones Industrial Average and the S&P 500, which have increased 36.1%, 4.3% and 17.8%, respectively. It has also surpassed the gains of Technology Select Sector SPDR (XLK), the most important component of the broad market index, which has increased 43.2% YTD.

Why Is FTNT Stock Rallying?

We believe that Fortinet’s impressive growth profile is attracting investors. The company is benefiting from the increased adoption of its networking and security platforms amid the growing hybrid working trend.

Fortinet, Inc. Price and Consensus

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

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 appliance 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.

Moreover, the growing adoption of SD-WAN solutions stands as a key growth driver for FTNT in the long run. Per the latest Future Market Insights report, the market size for SD-WAN solutions is likely to reach $53.8 billion by 2032 from $3.4 billion in 2022, indicating a CAGR of 31.6% during the 2022-2032 forecast period. As there are only a few vendors that offer security and SD-WAN solutions, Fortinet is well-positioned to capitalize on increasing opportunities in the market.

Further, the company is currently focusing on selling more subscription-based services, which are helping it generate stable revenues while expanding margins. It is also bolstering Fortinet’s customer base.

In the first quarter of 2023, Fortinet’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 lines in the near term.

Why Should You Bet on FTNT Stock?

Amid the ongoing macroeconomic headwinds and geopolitical issues, it is prudent to pick solid growth companies as these are financially stable, accruing profits in established markets. These stocks, with their solid fundamentals, allow investors to hedge their funds from any economic downturn.

Considering Fortinet’s impressive growth profile, we believe it is the right time to invest in the stock. Apart from having solid fundamentals, the stock has the favorable combination of a Growth Score of A and a Zacks Rank #1 (Strong Buy).

Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 or #2 (Buy) and a Growth Score of A or B offer solid investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fortinet has an impressive earnings surprise history. The company outpaced estimates in all the trailing four quarters, delivering an average earnings surprise of 16.4%. Additionally, FTNT stock has an impressive long-term earnings per share growth expectation of 18%.

The Zacks Consensus Estimate of $1.46 per share for 2023 earnings suggests growth of approximately 22.7% from the year-ago period. For 2024, the consensus mark for earnings is pegged at $1.71, indicating a year-over-year increase of 16.7%.

Other Stocks to Consider

Some other top-ranked stocks from the broader technology sector are Salesforce (CRM Quick QuoteCRM - Free Report) , Meta Platforms (META Quick QuoteMETA - Free Report) and Synopsys (SNPS Quick QuoteSNPS - Free Report) . Salesforce sports a Zacks Rank #1, while Meta and Synopsys each carry a Zacks Rank #2.

The Zacks Consensus Estimate for Salesforce's second-quarter fiscal 2024 earnings has been revised upward by 21 cents to $1.90 per share for the past 60 days. For fiscal 2024, earnings estimates have moved upward by 33 cents to $7.44 per share in the past 60 days.

Salesforce's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 15.5%. Shares of CRM have soared 71.8% YTD.

The Zacks Consensus Estimate for Meta's second-quarter 2023 earnings has been revised a penny northward to $2.85 per share in the past 30 days. For 2023, earnings estimates have increased by 4 cents to $12.01 per share in the past seven days.

Meta’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 15.5%. Shares of META have surged 158.1% YTD.

The Zacks Consensus Estimate for Synopsys’ third-quarter fiscal 2023 earnings has been revised by 7 cents northward to $2.73 per share in the past 60 days. For fiscal 2023, earnings estimates have increased to $10.82 per share from $10.54 in the past 60 days.

Synopsys' earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 3.6%. Shares of SNPS have rallied 44.4 % YTD.