by Ian Harvey
April 18, 2021
Shares of Fortinet Inc continue to climb, up 11% in the past 2 weeks, hitting an all-time high of $209.39 on Friday. Cyber Security Stocks have declined by about -1% year-to-date which provides for a great opportunity to enter the cybersecurity space at a better cost.
Meanwhile, “Stock Options Made Easy Members” Already Up 144% On A FTNT Options Trade!!
With the growth story to continue another trade maybe considered.
Cyber Security Stocks have declined by about -1% year-to-date, underperforming the S&P 500 which has gained about 10% over the same period.
However, the overall outlook remains up by over 130% since the end of 2019, significantly outperforming the broader markets.
The recent sell-off comes as investors are taking profits which were gained during the remote working where SaaS stocks had rallied big throughout the pandemic.
Now, it appears that a good opportunity has presented itself for investors to enter the cybersecurity space at a much better costing. Global IT spending is expected to pick up this year after a muted 2020, rising by about 8.4% to $4.1 trillion per Gartner. Cybersecurity is likely to be a major focus area for most companies given the increasing shift to distributed workplaces and cloud-based applications and some high-profile security breaches in recent months.
Fortinet Inc, a company that provides cybersecurity-related hardware and software, has been a strong performer, rising by about 34% year-to-date driven by stronger than expected earnings.
The Actual Recommended Trade.....
** OPTION TRADE: Buy FTNT MAY 21 2021 200.000 CALLS at approximately $6.70.
The Profit Explained…..
“Stock Options Made Easy members” entered a trade on Fortinet Inc Tuesday, April 06, 2021 for $5.99.
On Friday, April 16, the options trade peaked at $14.60 – a potential profit of 144%.
Why The Trade Recommendation On Fortinet Inc?
Within the cybersecurity
industry, Wall Street darlings include companies such as CrowdStrike Holdings,
Inc and Okta, Inc, which offer solutions in endpoint security and identity
management, respectively. But these companies don't address the entire spectrum
of potential security threats, and customers typically end up with multiple
disparate security applications that are not coordinated, providing attackers
with ample opportunity to exploit weaknesses.
Fortinet Inc (NASDAQ: FTNT)
addresses the above concerns with Fortinet Security Fabric, a broad platform
that covers the entire digital attack surface, including clouds, endpoints,
users, and third-party app integration. The platform operating system is
FortiOS. In Q4'20, the company released version 7.0, with 300 new features
including zero trust access, a feature that serves as a replacement for VPN.
In addition to software and
services, Fortinet Inc also sells FortiGate security appliances as part of the
overall platform strategy. The appliances provide Next Generation Firewall
(NGFW), which filter network traffic to protect from internal and external threats.
They are powered by the company's custom SPU NP7 network processor, an ASIC
that provides an advantage in terms of speed and cost of implementation.
Fortinet is also making a push into the secure software-defined wide-area
networking (SD-WAN) market.
The Financial Aspect…..
cybersecurity platform has driven strong results in 2020 amidst the pandemic,
as the company had annual revenue growth of 20%, with it reaching $2.6 billion
in sales for 2020.
In addition to strong
revenue growth, the company was also quite profitable, with net income growth
of 24.1% year-over-year in Q4 and free cash flow margin of 35%. The bottom-line
performance gives the company a strong balance sheet, with cash and cash
equivalents of $1.8 billion.
Management guided for
year-over-year revenue growth of 18% for both 2021and Q1'21. Historically, the
company has provided conservative guidance and it typically beats on revenue by
2%-3%, so it is reasonably safe to assume revenue growth will be in the 20+%
Fortinet Inc is riding on
key partnerships, which are driving its growth. Also, its powerful
cybersecurity and network security solutions are expanding its customer and
The pandemic has led to an
era of everything-from-home, starting from work and education to shopping and
other modes of entertainment. Fortinet Inc is benefiting from the rising demand
for security and networking products amid the coronavirus crisis, as a huge
global workforce is working remotely now. More people logging into employers'
networks means a greater need for security. The trend is spurring the demand
for Fortinet’s products.
Most recently, the company teamed up with wireless networking products provider Linksys, to increase the security and boost the performance and management of home networks. Through the alliance, the companies will offer enterprise-grade connectivity and security services to organizations. This will enable these organizations to provide agile and secure connectivity for their remote employees, taking advantage of the Fortinet Security Fabric. As part of the partnership, Fortinet Inc has also invested $75 million in Linksys.
This news follows the
company’s partnership with AT&T T to bring Secure Access Service Edge
(SASE) to the latter’s portfolio of Managed Security Services.
Fortinet’s Security Fabric
is gaining strong traction among enterprises. Recently, it acquired network
monitoring and remediation innovator, Panopta. Per the acquisition deal, its
Security Fabric will be combined with Panopta’s SaaS-based Hybrid scalable
network monitoring and diagnostics platform. This will enable Fortinet to
provide a comprehensive network and security operations management solution to
Fortinet’s Security Fabric
offerings have been adopted by companies like Aspire Global, MediaKind and MLP
Finanzberatung SE to improve their cloud environments with secure connectivity
and consistent visibility and control.
Further, the company
regularly adds key customers to its Fabric-Ready Partner program, which already
includes Amazon’s cloud arm AWS, Nozomi Networks, RAD, Indegy and
SecurityMatters. This will enhance the security solutions available to
operational technology customers through the Fortinet Security Fabric.
Fortinet Inc is a company
that is not as sexy as some of its cybersecurity peers such as CrowdStrike and
Okta. But Fortinet fulfills a corporate need for comprehensive protection from
cyber-attacks, which is demonstrated by consistent 20+% revenue growth over the
years. This company is not only growing fast, but also has a strong free cash
flow margin of 35%.
Fortinet Inc. has a 12-month low of $98.79 and a 12-month high of $193.84. The business’s 50-day moving average price is $174.42 and its two-hundred day moving average price is $142.56. The stock has a market cap of $30.42 billion, a PE ratio of 69.29, a P/E/G ratio of 4.04 and a beta of 1.10.
On Friday, April 16, 2021, Fortinet Inc had its target price boosted by Barclays from $202.00 to $210.00 in a research report. The brokerage presently has an "equal weight" rating on the software maker's stock. Barclays's price target would suggest a potential upside of 2.17% from the stock's previous close.
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!