Fortinet Stock (NASDAQ: FTNT): The NextGen Security Play
Fortinet Stock to Gain from New Opportunities
Today’s stock represents another of popular strategies of investing in stocks – stocks that thrive on fear and uncertainty. Apart from the threat of wars and political upheavals, enterprises have to guard themselves constantly against cyberattacks which have accelerated in the past few years. As the hacking of user data at Yahoo!, Equifax and Uber shows, no business can take the cyber security issue lightly. Hence, in the coming years, investors stand to make good returns if they choose their security stocks wisely.
One such stock is Fortinet Inc (NASDAQ: FTNT). It is a leading player in high-performance cyber security solutions and helps securing the largest enterprises and government organizations around the world. With continuous innovations in network security, the company’s solutions provide protection against cyberattacks. Fortinet is a strong player in security solutions and has the technology to take on increasing security performance requirements of any network.
The current cyber threat environment is unprecedented both in terms of volume and sophistication of attacks. With the alarming rise in cybercrimes, cybersecurity has increased in priority and management complexity for enterprises. Moreover, the rise of Internet of Things (IoT) and shifting to the cloud necessitates increased levels of security across an expanding ecosystem of networks. These trends shall keep the company’s products in demand and keep FTNT stock flying high.
As per the forecasts by Markets and Markets, the cybersecurity market is expected to touch almost $232 billion by 2022, representing a CAGR of 11% for 2017-2022. (Source: Cybersecurity Market – Global Forecast to 2022, Markets and Markets, July 2017)
Out of this market, Firewall market represents a multibillion dollar opportunity which Fortinet is well positioned to capture. Not only this, the company is also entering new market with high growth potential.
IoT and critical infrastructure is one of the most exciting drivers for the future growth of the company and Fortinet stock. With connected homes and smart cities gathering more steam, Fortinet shall be a big beneficiary of this development.
The cloud presents another great opportunity for Fortinet products. Fortinet provides the security backbone to the service providers that run the majority of the public cloud infrastructure. It is partnering with all the major cloud providers, including Microsoft Azure by Microsoft Corp (NASDAQ:MSFT), Amazon Web Services by Amazon.com Inc (NASDAQ:AMZN), and Alphabet Inc (NASDAQ:GOOGL) to offer world-class virtual security and management security services.
Fortinet’s Internet-based, integrated network security architecture – the Fortinet Security Fabric, is designed to correlate threat intelligence, identify and respond to complex threats and help protect next-generation environments.
Moreover, its impressive third quarter results are evidence of the popularity of its products and services. Fortinet announced Q3 2017 results last month. The company reported revenue of $374.2 million, an increase of 18% year over year and billings of almost $432 million, up 24% year over year. The company’s high-end products representing 41% of total product billings, registered strong growth in the quarter. The U.S. has been a great market for the company and accounted for 43% of the business, and grew 20% year over year.
FTNT stock has been gaining as a result of the strength in its enterprise business. It has gone up by more than 100% in the last 5 years and by about 35% in the last one year.
Chart courtesy of www.stockcharts.com
The management expects to keep expanding its business in the enterprise space on the back of a number of growth drivers. Fortinet’s large existing base of network security customers provides a solid foundation upon which it can grow its business further as it expands into new markets such as Software-Defined wide area network (SD-WAN). SD-WANs not only lower costs but also enhance productivity as more and more applications move to the cloud.
Analyst Take:
As the world enters a new era of networking, the attack surface shall keep on getting bigger. Fortinet offers a broad range of security products that provide customers with an integrated network security architecture. Apart from the strength in enterprise firewall business, the expanding cloud security market and IoT technologies shall boost the company’s market share in the coming years.
Given the current momentum, it is most likely that the business and FTNT stock shall continue climbing higher. The need for enterprise security shall get more critical in the near future and Fortinet is a good play for investors who believe in this and want to see their money grow in the coming years.
