Section 1: Company Overview and Fundamentals

• Company Overview: Fortinet, Inc. (FTNT) provides cyber security solutions to a variety of organizations, including enterprises, communication service providers, security service providers, government organizations and small businesses. Its product offerings consist of its core platform network security products and its enhanced platform technology products, which are offered in a range of forms spanning physical appliances, virtual appliances, software, and cloud-hosted services.

Kalkine’s American Tech Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

  Stock Performance:

• FTNT has given a correction of 11.09% in the past three months, and with an 25.33% of correction in the past six months.

• The stock is leaning towards its lower band of its 52-week range of USD 81.24 and 52-week low price of USD 44.12. Post the announcement of Q3FY24 results the stock has corrected by around 10.05%, with currently price near a support zone of USD 45-USD 50.
• The price is currently trading below its long-term (200-day) SMA and its short-term (50-day) SMA, with the current RSI of around 42.13, recovering from the oversold zone.

1.2 The Key Positives, Negatives, and Investment summary

1.3 Key Metrics:

In the third quarter of the fiscal year 2023, Fortinet's financial performance, represented as a percentage in comparison to the industry median, demonstrated higher metrics. The EBITDA margin was 8.6% for industry medians compared to 24.8% for FTNT, the operating margin witnessed a notable high number of 22.7% for FTNT compared to industry median of 2.3%, and the net margin was also high at 24.6% in Q3FY23 for FTNT compared to negative 1% for industry median. In the third quarter of the fiscal year 2023 compared to the same period in the previous fiscal year, Fortinet exhibited an enhanced current ratio, increasing from 1.07 to 1.3.

1.4 Top 10 shareholders:

The top 10 shareholders together form ~43.68% of the total shareholding, signifying diverse shareholding. Xie (Michael) and The Vanguard Group, Inc., are the biggest shareholders, holding the maximum stake in the company at ~9.04% and ~8.80%, respectively.

Section 2: Business Updates and Corporate Business Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

 2.2 Insights of Q3FY24:

Section 3: Key Risks and Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

    Stock Performance:

• FTNT has given a correction of 11.09% in the past three months, and with an 25.33% of correction in the past six months.

• The stock is leaning towards its lower band of its 52-week range of USD 81.24 and 52-week low price of USD 44.12. Post the announcement of Q3FY24 results the stock has corrected by around 10.05%, with currently price near a support zone of USD 45-USD 50.
• The price is currently trading below its long-term (200-day) SMA and its short-term (50-day) SMA, with the current RSI of around 42.13, recovering from the oversold zone.

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings per share Multiple Based Relative Valuation

 

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is November 20, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.