“Armchair Trader Series” Recommendations
- Week Beginning -
Monday, April 15, 2019

by Ian Harvey

IMPORTANT NOTE: This is a recommendation and individual members can use their own discretion as to when to enter or exit!

You may also wish to read Stock Options Made Easy Trading Philosophy

ALSO

"Trading Capital Management"



Option Trade – Fortinet Inc (NASDAQ: FTNT) Calls

Tuesday, April 16, 2019

** OPTION TRADE: Buy the FTNT JUN 21 2019 100.000 CALL at approximately $4.00.

Place a pre-determined sell at $8.00.

Also include a protective stop loss of $1.60.

Headquartered in Sunnyvale, CA, Fortinet Inc (NASDAQ: FTNT) is a provider of network security appliances and Unified Threat Management (UTM) network security solutions to enterprises, service providers and government entities worldwide. . Its products and services are sold through a network of more than 20,000 channel partners worldwide including distributors, resellers, value-added resellers and managed service providers.

Fortinet stock jumped into a buy zone as analysts expect the cybersecurity firm's shares to get a boost from share gains in the firewall market. Also, the company is rolling out new software-defined wide-area networking, or SD-WAN, products.

Firewalls are the biggest part of the cybersecurity software market. Firewalls protect computer networks by blocking online intrusions and monitoring web-based apps.

Analysts say Fortinet seems well-positioned as corporate buyers and telecom firms shift to networking technology called SD-WAN. The technology often taps bandwidth on the public internet.

"There is much emphasis and optimism around Fortinet's SD-WAN play," said Rob Owens, a KeyBanc Capital Markets analyst in a report. The Company also noted that there are no traditional security competitors in this segment, further providing a point of differentiation from both its traditional competition as well as networking vendors in the SD-WAN space.

Gregg Moskowitz, analyst at Mizuho Securities, also says Fortinet is well-positioned in the cybersecurity market.

"We held many conversations with partners and customers at the Accelerate user conference this week, most of who spoke quite favorably about Fortinet's competitive positioning in the firewall market," he wrote in a report.

Shares are up more than 50% over the past year, and with the latest results, Fortinet continues to be a strong cybersecurity play.

Last Earnings Report…..

Fortinet had solid fourth-quarter results. Fortinet's revenue jumped 22% year over year, to $507 million, and that its GAAP earnings per share popped to $1.04, up from a loss of $0.17 per share in the year-ago quarter. The company also increased its billings from $534 million in the fourth quarter 2017 to $649.2 million.

While other companies in the tech industry have been hurt by an economic slowdown in China and fears of other political uncertainties such as Brexit, Fortinet's management said those issues didn't affect the company in the fourth quarter.

Next Earnings Report…. Thursday, May 2nd…..

Equities analysts expect Fortinet to post $0.39 earnings per share (EPS) for the current fiscal quarter. Ten analysts have provided estimates for Fortinet’s earnings, with estimates ranging from $0.38 to $0.42. Fortinet posted earnings per share of $0.33 during the same quarter last year, which suggests a positive year-over-year growth rate of 18.2%.

Also, equities analysts expect that Fortinet will announce $471.57 million in sales for the current fiscal quarter. Ten analysts have made estimates for Fortinet’s earnings, with the highest sales estimate coming in at $475.00 million and the lowest estimate coming in at $470.00 million. Fortinet reported sales of $399.00 million during the same quarter last year, which indicates a positive year over year growth rate of 18.2%.

Moving Forward…..

Management expects more growth through 2019 and said revenue for the full year would be $465 million to $475 million, an increase of about 13% at the midpoint.

Fortinet's revenue growth is set to slow in 2019 compared to 2018, but the company's guidance still calls for solid double-digit growth on a revenue base that will exceed $2 billion this year. With the cybersecurity market forecast to grow by more than 10% annually through 2023, Fortinet has no shortage of growth opportunities ahead of it.

Analysts…..

Fortinet was upgraded by research analysts at BidaskClub from a “buy” rating to a “strong-buy” rating in a research report issued on Saturday.

Several other equities analysts have recently commented on the company…..

  • Mizuho began coverage on Fortinet in a research report on Tuesday, March 26th. They issued a “neutral” rating and a $90.00 price target for the company.
  • Zacks Investment Research upgraded Fortinet from a “hold” rating to a “strong-buy” rating and set a $94.00 price target for the company in a report on Tuesday, February 12th.
  • First Analysis upgraded Fortinet from a “neutral” rating to an “outperform” rating and raised their price target for the company from $80.00 to $92.00 in a report on Friday, February 8th.
  • Credit Suisse Group raised their price target on Fortinet from $60.00 to $70.00 and gave the company an “underperform” rating in a report on Thursday, February 7th.
  • Finally, Oppenheimer raised their price target on Fortinet from $88.00 to $97.00 and gave the company an “outperform” rating in a report on Thursday, February 7th.

Finally…..

Shares of Fortinet stock opened at $95.22 on Tuesday. Fortinet Inc has a 12-month low of $53.40 and a 12-month high of $95.59. The company has a market cap of $15.82 billion, a price-to-earnings ratio of 84.27, and a P/E/G ratio of 4.77 and a beta of 0.91.