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Factors to Watch Out for Ahead of Fortinet (FTNT) Q3 Earnings
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Fortinet Inc. (FTNT - Free Report) is slated to release third-quarter 2018 results on Nov 1.
The stock has a stellar record of positive earnings surprises. Its earnings beat the Zacks Consensus Estimate in all the last four quarters, with an average positive surprise of 21.7%.
For the third quarter, the company expects revenues of $445-$455 million. Non-GAAP earnings per share are anticipated in the band of 41-43 cents.
The current Zacks Consensus Estimate for the quarter under review is pegged at 42 cents. We note that the Zacks Consensus Estimate for the quarter has remained nearly unchanged over the past 60 days. Additionally, the consensus estimate for revenues is roughly $450.9 million, up 20.5% from the year-ago quarter actual figure.
So, let’s see how things are shaping up prior to this announcement.
Factors at Play
Fortinet’s strong product refresh cycle and differentiated offerings coupled with solid execution by the sales and marketing group is helping it gain share in the network security market. A large number of deal wins and customer additions are aiding top-line growth.
Strong global demand for the company’s Security Fabric offerings due to digital transformation across most industries is a tailwind. The company’s Security Fabric architecture, its cloud offering and customer FortiASIC technology are helping it expand in the market. Moreover, the company’s E-Series appliance line is also expected to aid its strong Product growth.
In September, Fortinet introduced a new network access control product line, FortiNAC, to deliver network segmentation and automated responses for IoT security. The company also expanded offerings on Microsoft (MSFT - Free Report) Azure to enhance protection of customers’ hybrid cloud environments. During the quarter, the company announced the expansion of Security Fabric offerings on Alphabet’s (GOOGL - Free Report) Google Cloud Platform.
We note that Fortinet’s initiative to change its business model to subscription-based service is a tailwind. The Zacks Consensus Estimate for Service revenues is pegged at $294 million, indicating an improvement of 24% from the figure reported in the year-ago quarter.
Notably, subscription-based service is a high gross margin business (approximately 80%) compared with the hardware-centric model. We anticipate this strategy to continue to drive the company’s bottom-line performance.
However, stiff competition from key network security players such as Cisco Systems Inc. (CSCO - Free Report) , Check Point, Juniper Networks and Palo Alto Networks remains a headwind.
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Factors to Watch Out for Ahead of Fortinet (FTNT) Q3 Earnings
Fortinet Inc. (FTNT - Free Report) is slated to release third-quarter 2018 results on Nov 1.
The stock has a stellar record of positive earnings surprises. Its earnings beat the Zacks Consensus Estimate in all the last four quarters, with an average positive surprise of 21.7%.
For the third quarter, the company expects revenues of $445-$455 million. Non-GAAP earnings per share are anticipated in the band of 41-43 cents.
The current Zacks Consensus Estimate for the quarter under review is pegged at 42 cents. We note that the Zacks Consensus Estimate for the quarter has remained nearly unchanged over the past 60 days. Additionally, the consensus estimate for revenues is roughly $450.9 million, up 20.5% from the year-ago quarter actual figure.
So, let’s see how things are shaping up prior to this announcement.
Factors at Play
Fortinet’s strong product refresh cycle and differentiated offerings coupled with solid execution by the sales and marketing group is helping it gain share in the network security market. A large number of deal wins and customer additions are aiding top-line growth.
Strong global demand for the company’s Security Fabric offerings due to digital transformation across most industries is a tailwind. The company’s Security Fabric architecture, its cloud offering and customer FortiASIC technology are helping it expand in the market. Moreover, the company’s E-Series appliance line is also expected to aid its strong Product growth.
In September, Fortinet introduced a new network access control product line, FortiNAC, to deliver network segmentation and automated responses for IoT security. The company also expanded offerings on Microsoft (MSFT - Free Report) Azure to enhance protection of customers’ hybrid cloud environments. During the quarter, the company announced the expansion of Security Fabric offerings on Alphabet’s (GOOGL - Free Report) Google Cloud Platform.
We note that Fortinet’s initiative to change its business model to subscription-based service is a tailwind. The Zacks Consensus Estimate for Service revenues is pegged at $294 million, indicating an improvement of 24% from the figure reported in the year-ago quarter.
Notably, subscription-based service is a high gross margin business (approximately 80%) compared with the hardware-centric model. We anticipate this strategy to continue to drive the company’s bottom-line performance.
However, stiff competition from key network security players such as Cisco Systems Inc. (CSCO - Free Report) , Check Point, Juniper Networks and Palo Alto Networks remains a headwind.
Fortinet, Inc. Price and EPS Surprise
Fortinet, Inc. Price and EPS Surprise | Fortinet, Inc. Quote
Fortinet has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>