Last week saw the newest yearly earnings release from Fortinet, Inc. (NASDAQ:FTNT), an important milestone in the company’s journey to build a stronger business. The result was positive overall – although revenues of US$2.2b were in line with what analysts predicted, Fortinet surprised by delivering a statutory profit of US$1.87 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company’s performance, look at what top analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. We’ve gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
See our latest analysis for Fortinet
Taking into account the latest results, the latest consensus from Fortinet’s 26 analysts is for revenues of US$2.54b in 2020, which would reflect a notable 18% improvement in sales compared to the last 12 months. Statutory per share are forecast to be US$1.92, approximately in line with the last 12 months. In the lead-up to this report, analysts had been modelling revenues of US$2.48b and earnings per share (EPS) of US$1.84 in 2020. It looks like there’s been a modest increase in sentiment following the latest results, with analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
It will come as no surprise to learn that analysts have increased their price target for Fortinet 11% to US$127 on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Fortinet at US$150 per share, while the most bearish prices it at US$82.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. We can infer from the latest estimates that analysts are expecting a continuation of Fortinet’s historical trends, as next year’s forecast 18% revenue growth is roughly in line with 19% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 12% per year. So although Fortinet is expected to maintain its revenue growth rate, it’s definitely expected to grow faster than the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Fortinet’s earnings potential next year. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. We have forecasts for Fortinet going out to 2024, and you can see them free on our platform here.
You can also see our analysis of Fortinet’s Board and CEO remuneration and experience, and whether company insiders have been buying stock.
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