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Exam Code: FML-5.3.8 Practice exam 2022 by team
FML-5.3.8 FortiMail 5.3.8 Specialist
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Killexams : Fortinet Specialist syllabus - BingNews Search results Killexams : Fortinet Specialist syllabus - BingNews Killexams : Fortinet authentication bypass flaw exploited in the wild; security experts call patching critical

The Fortinet authentication bypass vulnerability that was discovered last week and has been confirmed in the wild was the subject of at least two accurate research blogs and on Tuesday was entered into the CISA Known Exploited Vulnerabilities (KEV) Catalog.

Fortinet released an update on Monday that detailed how security teams can check their logs for indicators of compromise, a syllabu that was also covered in a blog yesterday by

Jerrod Piker, competitive intelligence analyst at Deep Instinct, explained that this exploit  – CVE-2022-40684 – functions as a vulnerability in the HTTP/S admin access to most Fortinet solutions. Piker said any organizations that deployed Fortinet devices running FortiOS, FortiProxy, or FortiSwitchManager should immediately respond to this alert, especially since CVE-2022-40684 has been exploited in the wild.

Piker added that the vulnerability lets an unauthenticated user perform administrative actions through the HTTP/S administration portal. These actions may include, but are not limited to: admin SSH key modification to allow access by remote attacker; creation of new local users; modification of configuration to reroute traffic; and access to full system configurations.

Mike Parkin, senior technical engineer at Vulcan Cyber, said vulnerabilities in security products are always problematic, especially when it’s on an edge or gateway device.

“While Fortinet has released an update and offers workarounds that could mitigate the risk, because there’s evidence this has already been exploited in the wild, anyone using the affected products should update sooner, rather than later, and at least restrict access to the devices per industry best practices,” Parkin said.

David Farquhar, solutions architect at Nucleus Security, which also published a blog on Tuesday by Ryan Cribelar on this vulnerability, said the Fortinet products are the types of devices that live at the edge of the network, so they are intended to protect it. As a result, Farquhar said they are the very last place that organizations want an attacker getting access to the management interface.

“In theory, you shouldn’t have that management interface accessible on the internet,” Farquhar said. “Unfortunately, sometimes an organization will make that management interface accessible temporarily, but then forget to close it back up, leaving them exposed. This is one reason why it’s very important to make sure that security teams are scanning all of their publicly-facing address space and looking for things that shouldn’t be there, like management interfaces."

Wed, 12 Oct 2022 09:59:00 -0500 en text/html
Killexams : Fortinet: Fairly Valued, Profitable And Growing Rapidly
Computer System Hacked. Virus Software Screen


Fortinet (NASDAQ:FTNT) is a cybersecurity powerhouse that is a leader in firewalls. According to Check Point Research, global cybersecurity attacks have increased by 32% year over year, with over 1,200 attacks per week globally. The rise of remote working, the cloud and Internet of Things (IoT) devices have widened the attack surface which has made networks more vulnerable to attack. Thus it's no surprise the global cybersecurity market was worth $139 billion in 2021 and is expected to grow at a rapid 13.4% compounded annual growth rate reaching $376 billion by 2029. Fortinet is poised to ride this trend as one of the largest cybersecurity companies in the industry, with best-in-class technology. The company's stock price has slid down by 29% from its all-time highs in December 2021, and the stock now looks to be fairly valued, while being profitable. In this post, I'm going to break down the company's business model, financials, and valuation, let's dive in.

Secure Business Model

The company's FortiGate Firewall solution makes up over one-third of firewall shipments globally, leaving competitors in the dust.

Fortinet firewall

Fortinet firewall (Investor Presentation 2022)

Fortinet's firewall is also rated as the number one market leader by Gartner and the platform has even won the customer choice award for 2022.

Fortinet firewall

Fortinet firewall (Gartner)

Its firewall solution offers a network security framework that offers threat prevention while also not limiting performance. Customer reviews also indicate the solution is "simple to use" and easier to set up which can be a real selling point for any digital transformation product. From the graphic below you can see the core hardware and software products are complimented by a series of security services that are sold on a subscription, which thus offers recurring revenue.

Fortinet products

Fortinet products (Investor Presentation)

Fortinet's technological success is driven by its proprietary ASIC (Application Specific Integrated Circuit) technology. This is a custom semiconductor design that enables higher performance to be achieved at a much lower cost than an off-the-shelf non-custom piece of hardware.

According to a accurate survey of Chief Information Security Officers (CISOs) by Gartner, 75% of them are overwhelmed by the number of vendors and would like to consolidate with a small number of security providers. This is a large increase from 29% of CISOs in 2020. The cybersecurity industry is extremely fragmented with no one company making up over 10% market share. This offers an opportunity for Fortinet as they already have the second largest revenue, just behind Palo Alto Networks (PANW). Therefore as the industry consolidates Fortinet can offer customers its MESH platform that offers security from endpoint devices to the data center and hybrid cloud.


Fortinet solution (Investor presentation 2022)

Fortinet is also a Gartner Magic Quadrant leader in the software-defined WAN Edge Infrastructure. WAN stands for "Wide Area Network" and is basically the network that connects together a corporation's branch offices. The "software" part makes it much easier to scale, manage and extend this network.

Growing Financials

Fortinet generated solid financial results for the second quarter of 2022. Revenue was $1.03 billion which popped by 28.6% year over year and beat analyst estimates by $2.43 million. This growth was driven by strong product revenue of $400.7 million, which grew by a rapid 34.3% year over year, while its core platform grew revenue by 35% and extension products by 33%, which was a positive sign that its "land and expand" model is working.


Revenue (Fortinet Q2 Earnings)

Total service revenue was $629 million, which increased by a rapid 25.2% year over year. This was driven mainly by security subscription service revenue which increased by 25% year over year to $340 million. Support service revenue also increased by a rapid 26% year over year to $289 million. Overall these revenue trends were pretty strong with diverse growth generated across the board.

Data by YCharts

If we take a step back, Billings which is the amount actually invoiced to customers and is the true "top line" for SaaS companies, also showed solid growth. Billings were $1.3 billion which increased by 36% year over year. This was driven by a strong 50% YoY increase in the number of larger customers, which transact over $1 million. This strategy of "growing upmarket" makes a lot of sense as larger customers tend to be more "sticky", have larger budgets, and more upsell opportunities. Fortinet's focus on vendor consolidation has been a key selling point that has made the platform popular with CISOs (Chief Information Security Officers). Service billings also accelerated with a 36% increase year over year. This was driven by pricing actions that offset headwinds from Russian services that had been halted.

Another great indicator to analyze with SaaS companies is "Bookings", this is a forward-looking metric that indicates the value of contracts signed by a customer. In this case, Bookings were $1.376 billion in the second quarter of 2022, which increased by 42% year over year. This was driven by strong Secure SD-WAN bookings which increased by 60% year over year, as the IT industry begins to converge networking and security together. The company also scored a larger number of global 2000 companies, which increased by 65% year over year.


Bookings (Q2 Earnings Report)

Total Backlog which is the "unbilled" portion of the contract value was $350 million, which increased by $72 million and represented strong product demand. This was mainly driven by networking equipment, which made up ~50%, while FortiGates made up 40%. The track record shows this backlog is extremely strong and "sticky". Fortinet's, current customers make up over 95% of Backlog, and it is well diversified across customers. Management believes its Backlog will continue to increase in 2022, despite supply chain constraints which are making product shipping a challenge.


Backlog (Q2 Earnings Report)

Fortinet is extremely diversified across various customer categories. For instance, larger enterprises make up 40% of its customer base which is the "safest" and most lucrative customer type, due to the aforementioned reasons. By geography, over 100 countries make up 47% of revenue, followed by 28% for the US. This is especially important given the increasing geopolitical uncertainty, driven by the Russia-Ukraine war. Its Industry diversification is also strong with its service being most popular by worldwide governments at 16% and "other industries" at 39%.

Customer Type

Customer Type (Q2 Report)

Moving onto profitability, Fortinet is solidly profitable with a GAAP operating margin of 19% and income of $147.5 million in Q2,22, which is fantastic. This is in sharp contrast to many other cybersecurity companies out there such as SentinelOne (S) which is unprofitable. Fortinet generated solid earnings per share of $0.21 in the second quarter, which beat analyst estimates by $0.05.

Data by YCharts

Fortinet also generated strong free cash flow of $283.5 million in Q2,22, although it was down from the $394.7 million generated in the prior year. This was driven by an increase in Days Sales Outstanding (DSO) to 14 days, this indicates the company is experiencing delays on its payments. This can be attributed to the timing of inventory deliveries from various contract manufacturers. The new R&D capitalization rules have impacted many businesses across the board and have caused a tax increase of between $85 million and $110 million for Fortinet.

The good news is Fortinet has a robust balance sheet with $1.755 billion in cash and short-term investments. In addition, the business has long-term debt of $984.9 million. In the six months ending on June 30th, 2022, Fortinet bought back over 25.8 million shares of stock at an average price of ~$57.82 per share, for approximately $1.49 billion. Management has also authorized a $1 billion increase in its share repurchase program.

Advanced Valuation

In order to value Fortinet, I have plugged the latest financials into my advanced valuation model which uses the discounted cash flow method of valuation. I have forecasted a 24% compounded annual growth rate on its revenue over the next 5 years, based on analyst estimates.

Fortinet stock valuation

Fortinet stock valuation (created by author Ben at Motivation 2 Invest)

I have forecasted the business's margin to increase to 27% over the next 8 years, as the company continues to upsell products and offer its high-margin security software solution. It should be noted that this margin includes an adjustment for R&D expenses which I have capitalized. Thus the reported base margin is actually 19% as mentioned prior and I expect this to increase to ~23%.

Fortinet stock valuation 2

Fortinet stock valuation 2 (created by author Ben at Motivation 2 Invest)

Given these factors I get a fair value of $48.81 per share, the stock is trading at $51 per share and thus is "fairly valued" in my eyes, given the strong profitability of the business.

As an extra data point, Fortinet trades at a Price to Earnings ratio = 48, which is fairly high but this is ~1% cheaper than its 5-year average.

Data by YCharts

Relative to other cybersecurity companies, Fortinet trades at a mid-range price-to-sales ratio = 9.2. For example, Palo Alto Networks is slightly cheaper with a PS ratio = 7.4.

Data by YCharts


Recession/Longer deal cycles

The high inflation and rising interest rate environment have caused many analysts to forecast a recession. Therefore I expect purchasing deals to take longer to close, as IT security teams delay new spending. The good news is Fortinet has increasingly focused on the Return on Investment (ROI) of its service and they even have an ROI calculator on its website. Thus longer term, the value proposition is still strong for businesses.


There are many competitors in the Cybersecurity industry. Top competitors according to Gartner include; Palo Alto Networks, Juniper (JNPR), Cisco (CSCO), Forcepoint, F5 (FFIV) and more. However, Fortinet has the highest-rated network firewall platform as mentioned prior.

Final Thoughts

Fortinet is a leading cybersecurity company that dominates the firewall industry. The company has expanded its product range and is now poised to benefit from trends such as industry growth and vendor consolidation. The stock is fairly valued, profitable, and growing steadily, thus this looks to be a great investment for the long term.

Tue, 04 Oct 2022 11:16:00 -0500 en text/html
Killexams : Why Fortinet Stock Outpaced the Market on Monday

What happened

IT network security stock Fortinet (FTNT -2.17%) looked relatively secure on Monday. The company's shares fell on the day, but by less than 0.5% -- a less steep slide than the nearly 0.8% decline of the broad S&P 500 index. A positive new research note from a prominent investment bank -- complete with an upgrade and price target lift -- was a key reason why.  

So what

Morgan Stanley's Hamza Fodderwala feels that Fortinet is underappreciated by the market, and consequently has upgraded his recommendation on the stock from equal weight to overweight (from neutral to buy, in other words). He also gave its price target a modest bump: He now believes shares of the cybersecurity company will hit $69 within the next year, up from his previous target of $66.

In Fodderwala's view, demand for IT security solutions "remains durable" even in this rather shaky macroeconomic environment, in which many individuals and companies are concerned about inflation and growth.

The analyst believes that Fortinet will continue to grow organically and increase market share as the total addressable market for its services rises. That view was bolstered by his accurate checks of the company, which reveal an increasing backlog and revisions for 2023.

Now what

Fodderwala thinks Fortinet is capable of sustaining its momentum for several years. The company is operating from a low base, as by his estimation it has only 5% revenue penetration. This should, he thinks, allow it to deliver compound annual revenue growth of at least 20% over the next five years.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Fortinet. The Motley Fool has a disclosure policy.

Mon, 10 Oct 2022 23:58:00 -0500 Eric Volkman en text/html
Killexams : Fortinet to Announce Third Quarter 2022 Financial Results

Fortinet, Inc.

SUNNYVALE, Calif., Oct. 03, 2022 (GLOBE NEWSWIRE) --

News Summary
Fortinet® (NASDAQ: FTNT), a global leader in broad, integrated, and automated cybersecurity solutions, announced that it will hold a conference call to discuss its third quarter 2022 financial results on Wednesday, November 2, at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time).

Fortinet's financial results conference call will be broadcast live in listen-only mode on the company’s investor relations website at While not required, it is recommended that you join at least 10 minutes prior to the event start.

The CEO and CFO’s prepared remarks, supplemental slides and a call replay will be accessible from the Quarterly Earnings page on the Investor Relations page of Fortinet's website at

About Fortinet
Fortinet (NASDAQ: FTNT) makes possible a digital world that we can always trust through its mission to protect people, devices, and data everywhere. This is why the world’s largest enterprises, service providers, and government organizations choose Fortinet to securely accelerate their digital journey. The Fortinet Security Fabric platform delivers broad, integrated, and automated protections across the entire digital attack surface, securing critical devices, data, applications, and connections from the data center to the cloud to the home office. Ranking #1 in the most security appliances shipped worldwide, more than 595,000 customers trust Fortinet to protect their businesses. And the Fortinet NSE Training Institute, an initiative of Fortinet’s Training Advancement Agenda (TAA), provides one of the largest and broadest training programs in the industry to make cyber training and new career opportunities available to everyone. Learn more at, the Fortinet Blog, or FortiGuard Labs.


Copyright © 2022 Fortinet, Inc. All rights reserved. The symbols ® and ™ denote respectively federally registered trademarks and common law trademarks of Fortinet, Inc., its subsidiaries and affiliates. Fortinet’s trademarks include, but are not limited to, the following: Fortinet, the Fortinet logo, FortiGate, FortiOS, FortiGuard, FortiCare, FortiAnalyzer, FortiManager, FortiASIC, FortiClient, FortiCloud, FortiCore, FortiMail, FortiSandbox, FortiADC, FortiAI, FortiAP, FortiAppEngine, FortiAppMonitor, FortiAuthenticator, FortiBalancer, FortiBIOS, FortiBridge, FortiCache, FortiCall, FortiCam, FortiCamera, FortiCarrier, FortiCASB, FortiCenter, FortiCentral, FortiConnect, FortiController, FortiConverter, FortiCWP, FortiDB, FortiDDoS, FortiDeceptor, FortiDirector, FortiDNS, FortiEDR, FortiExplorer, FortiExtender, FortiFirewall, FortiFone, FortiGSLB, FortiHypervisor, FortiInsight, FortiIsolator, FortiLocator, FortiLog, FortiMeter, FortiMoM, FortiMonitor, FortiNAC, FortiPartner, FortiPenTest, FortiPhish, FortiPortal, FortiPresence , FortiProtect, FortiProxy, FortiRecorder, FortiReporter, FortiSASE, FortiScan, FortiSDNConnector, FortiSIEM, FortiSDWAN, FortiSMS, FortiSOAR, FortiSwitch, FortiTester, FortiToken, FortiTrust, FortiVoice, FortiVoIP, FortiWAN, FortiWeb, FortiWiFi, FortiWLC, FortiWLCOS and FortiWLM.

Other trademarks belong to their respective owners. Fortinet has not independently Tested statements or certifications herein attributed to third parties and Fortinet does not independently endorse such statements. Notwithstanding anything to the contrary herein, nothing herein constitutes a warranty, guarantee, contract, binding specification or other binding commitment by Fortinet or any indication of intent related to a binding commitment, and performance and other specification information herein may be unique to certain environments. This news release may contain forward-looking statements that involve uncertainties and assumptions, such as statements regarding technology releases among others. Changes of circumstances, product release delays, or other risks as stated in our filings with the Securities and Exchange Commission, located at, may cause results to differ materially from those expressed or implied in this press release. If the uncertainties materialize or the assumptions prove incorrect, results may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Fortinet assumes no obligation to update any forward-looking statements, and expressly disclaims any obligation to update these forward-looking statements.

Mon, 03 Oct 2022 03:43:00 -0500 en-US text/html
Killexams : Analyst Ratings for Fortinet

Fortinet FTNT has observed the following analyst ratings within the last quarter:

Bullish Somewhat Bullish Indifferent Somewhat Bearish Bearish
Total Ratings 2 6 1 0 0
Last 30D 0 1 0 0 0
1M Ago 1 1 0 0 0
2M Ago 0 1 0 0 0
3M Ago 1 3 1 0 0

In the last 3 months, 9 analysts have offered 12-month price targets for Fortinet. The company has an average price target of $71.56 with a high of $78.00 and a low of $65.00.

Below is a summary of how these 9 analysts rated Fortinet over the past 3 months. The greater the number of bullish ratings, the more positive analysts are on the stock and the greater the number of bearish ratings, the more negative analysts are on the stock

This current average has decreased by 5.59% from the previous average price target of $75.80.

Benzinga tracks 150 analyst firms and reports on their stock expectations. Analysts typically arrive at their conclusions by predicting how much money a company will make in the future, usually the upcoming five years, and how risky or predictable that company's revenue streams are.

Analysts attend company conference calls and meetings, research company financial statements, and communicate with insiders to publish their ratings on stocks. Analysts typically rate each stock once per quarter or whenever the company has a major update.

Some analysts publish their predictions for metrics such as growth estimates, earnings, and revenue to provide additional guidance with their ratings. When using analyst ratings, it is important to keep in mind that stock and sector analysts are also human and are only offering their opinions to investors.

If you want to keep track of which analysts are outperforming others, you can view updated analyst ratings along withanalyst success scores in Benzinga Pro.

This article was generated by Benzinga's automated content engine and reviewed by an editor.

© 2022 Benzinga does not provide investment advice. All rights reserved.

Fri, 07 Oct 2022 03:08:00 -0500 text/html
Killexams : Fortinet warns that critical authentication bypass flaw has been exploited
Image: Getty Images

The Cybersecurity and Infrastructure Security Agency (CISA) has added a Fortinet critical flaw to its known exploited vulnerabilities catalog.   

CISA on Tuesday added the flaw to the KEV catalog, a day after Fortinet revealed an authentication bypass CVE-2022-40684 that it patched last week was already being exploited in the wild.

"Fortinet is aware of an instance where this vulnerability was exploited, and recommends immediately validating your systems against the following indicator of compromise in the device's logs," Fortinet said

Also: The scary future of the internet: How the tech of tomorrow will pose even bigger cybersecurity threats

The firm has released updates for FortiOS, FortiProxy and FortiSwitchManager to address the flaw, which affects several of its security appliances.

"An authentication bypass using an alternate path or channel vulnerability [CWE-288] in FortiOS, FortiProxy and FortiSwitchManager may allow an unauthenticated atttacker to perform operations on the administrative interface via specially crafted HTTP or HTTPS requests."

However, for customers that can't apply updates immediately, it has also provided workarounds to disable HTTP/HTTPS administrative interface or limit IP addresses that can reach the administrative interface. 

Separately, CISA on Tuesday also added the Windows flaw CVE-2022-41033 to its KEV catalog. Microsoft released an update for it on Tuesday to address a Windows COM+ Event System Service elevation of privilege vulnerability. Microsoft confirmed it had been exploited but noted that the vulnerability had not been publicly disclosed. 

CISA has ordered federal agencies to apply fixes for both flaws by November 1. 

Security researchers with the Horizon3 Attack Team have published early indicators of compromise to help admins discover compromised devices.

Editorial standards
Wed, 12 Oct 2022 01:46:00 -0500 en text/html
Killexams : Fortinet (FTNT) is an Incredible Growth Stock: 3 Reasons Why No result found, try new keyword!Fortinet (FTNT) is one such stock that our proprietary system currently recommends. The company not only has a favorable Growth Score, but also carries a top Zacks Rank. Research shows that stocks ... Wed, 12 Oct 2022 07:37:00 -0500 text/html Killexams : Fortinet (FTNT) Dips More Than Broader Markets: What You Should Know

Fortinet (FTNT) closed the most accurate trading day at $48.21, moving -0.76% from the previous trading session. This move lagged the S&P 500's daily loss of 0.33%. Meanwhile, the Dow lost 0.1%, and the Nasdaq, a tech-heavy index, lost 0.22%.

Prior to today's trading, shares of the network security company had lost 6.34% over the past month. This has was narrower than the Computer and Technology sector's loss of 14.71% and the S&P 500's loss of 11.67% in that time.

Investors will be hoping for strength from Fortinet as it approaches its next earnings release, which is expected to be November 2, 2022. On that day, Fortinet is projected to report earnings of $0.27 per share, which would represent year-over-year growth of 35%. Our most accurate consensus estimate is calling for quarterly revenue of $1.12 billion, up 29.48% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $1.05 per share and revenue of $4.38 billion. These totals would mark changes of +31.25% and +31.06%, respectively, from last year.

Investors might also notice accurate changes to analyst estimates for Fortinet. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.06% higher. Fortinet is currently sporting a Zacks Rank of #1 (Strong Buy).

Looking at its valuation, Fortinet is holding a Forward P/E ratio of 46.39. For comparison, its industry has an average Forward P/E of 42.22, which means Fortinet is trading at a premium to the group.

It is also worth noting that FTNT currently has a PEG ratio of 2.58. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. FTNT's industry had an average PEG ratio of 2.32 as of yesterday's close.

The Security industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 26, which puts it in the top 11% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on

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Wed, 12 Oct 2022 21:35:00 -0500 en-US text/html
Killexams : Fortinet: Far From Being Undervalued - Stay On The Sidelines
Fortinet Headquarters



Leading cybersecurity company Fortinet, Inc. (NASDAQ:FTNT) has been a solid investment for investors over the past ten years, with a 10Y total return CAGR of 26.7%. Notably, the stock has been a massive winner for investors who grabbed it early in the 2020 COVID bottom, with gains that reached over 430% through its December 2021 highs.

We managed to get on board in September 2020 and rode it toward its December 2021 highs, but we have since pared most of our positions in early 2022. We postulate that Fortinet's underlying thesis remains intact. But, with a slowing growth cadence moving ahead, we are not convinced its valuations are sustainable at the levels in early 2022.

FTNT has also been battered in the tech bear market, as the market sent it falling by more than 36% through its accurate lows. Hence, we believe investors could be considering buying the dips in FTNT to ride on the next uptrend when the market recovers.

However, we urge investors to be cautious, as we don't think the digestion in FTNT is near completion. Therefore, adding at the current levels could lead to market underperformance moving ahead, despite its robust growth drivers.

As such, we rate FTNT as a Hold for now and urge investors to wait on the sidelines.

Fortinet's Growth Could Peak in 2022

Fortinet Billings change %

Fortinet Billings change % (Company filings)

As seen above, Fortinet has leveraged an enlarged TAM in its network security leadership by tapping robust growth drivers in the broader cybersecurity space, including in the cloud. Hence, it has been growing faster than the estimates of its TAM expansion (10% CAGR), suggesting that Fortinet has been gaining share against its peers.

However, its billings growth has likely peaked in Q3'21, which is also consistent with FTNT's December 2021 highs. Furthermore, management's FY22 billings guidance suggests that growth in H2'22 is expected to slow further, down to 32.1% in FQ3 and 32.5% in FQ4. Hence, even management's guidance indicates that investors need to expect growth normalization moving forward.

Fortinet Revenue change % and Adjusted EBIT change % consensus estimates (By FY)

Fortinet Revenue change % and Adjusted EBIT change % consensus estimates (By FY) (S&P Cap IQ)

As seen above, even the bullish consensus estimates indicate that Fortinet's growth could have peaked in FY22 before moderating further through FY25.

We believe the estimates are credible, given the guidance in its billings growth. Also, management telegraphed an FY25 model of $8B in revenue. Therefore, investors need to be wary about projecting higher growth estimates than what management has suggested.

Notwithstanding, bullish investors could argue that cybersecurity solutions are non-cyclical and should be impacted less significantly by the looming economic recession.

However, we urge investors to be more cautious in making that assumption. Instead, we encourage investors to pay close attention to whether the company expects enterprise spending to moderate further, impacting its near-term growth momentum.

FTNT Is Not Undervalued

FTNT NTM EBITDA multiples valuation trend

FTNT NTM EBITDA multiples valuation trend (koyfin)

FTNT has fallen markedly from the overvaluation zones in December 2021 as the market justifiably digested its rapid surge from March 2020.

However, we postulate that FTNT seems far from being considered undervalued, even as we move closer to a global recession. Therefore, coupled with potentially peak growth in FY22, we urge investors to be cautious about adding FTNT at the current levels.

Accordingly, we consider FTNT's valuation as well-balanced at best.

Is FTNT Stock A Buy, Sell, Or Hold?

FTNT price chart (monthly)

FTNT price chart (monthly) (TradingView)

FTNT's long-term chart also indicates that investors need to be cautious about considering adding more positions at the current levels.

We assess that its rapid surge from March 2020 is still being digested by the market, with the distribution phase still in action through September 2022 from its December 2021 highs.

We assess that the distribution phase could find a sustained consolidation phase in the gap between its near-term and long-term support. However, it's still too early to determine where the likely zone could be.

However, we will be watching whether FTNT can sustain its long-term uptrend above its 50-month moving average (blue line). Losing that support level could spell more pain toward its long-term support.

FTNT price chart (weekly)

FTNT price chart (weekly) (TradingView)

Poring through FTNT's medium-term chart corroborates our view that the digestion is ongoing, as it had already lost its medium-term bullish bias.

Therefore, we urge investors to be patient. We have yet to glean any capitulation price action that could suggest investors have been forced to flee in a panic, de-risking the entry levels for less aggressive buy zones.

We rate FTNT as a Hold for now.

Mon, 10 Oct 2022 00:30:00 -0500 en text/html
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