Software tools powered by artificial intelligence have been a game changer for cybersecurity players. Companies increasingly want to take on phishing, malware and other cyberattacks amid the explosive growth in data centers and cloud applications. Fortinet (FTNT) stock has rallied with this boom.
The Big Cap 20 stock jumped after third-quarter results on Nov. 7 and quickly formed a flat base with a buy point of 100.59. Shares then briefly touched a buy zone Monday and reached an all-time high of 101.
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Fortinet stock pulled back in lighter volume and now is testing its 10-week moving average. Shares also traded tightly within the base and now offer an earlier entry at 100.40.
The stock had matched the S&P 500 before its post-earnings rally changed it to an outperformer. The relative strength line on IBD MarketSurge, which compares the stock to the benchmark index, is near a new high.
Fortinet stock also holds a Relative Strength Rating of 92 out of best-possible 99. That means it has outperformed 92% of other stocks in the Investor’s Business Daily database over the past 52 weeks. Its RS Rating was just 32 a year ago.
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Fortinet stock holds an ideal EPS Rating and Composite Rating of 99. It also ranks first in the computer software security group, according to IBD Stock Checkup.
Security On A Single Platform
Fortinet provides networking and security tools on a single platform.
Here’s how it works: The dashboard pulls information from both its ethernet switches and firewalls into a “single pane of glass” — a phrase used by information technology teams. Its AI program’s self-learning abilities accelerate the process of detecting and resolving breaches.
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The unified dashboard helps developers, operations, security and other business teams. Meanwhile, its AI helps detect and respond to threats and protect data using pattern-based, as opposed to rule-based, technology.
Generative AI features provide threat scenarios, as well as guidelines and instructions to manage risks.
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Sales growth has been steady over the past eight quarters, ranging from 7% to 33%. Earnings growth has ranged between 16% and 79%.
Third-quarter sales and earnings accelerated for the second time in a row with earnings of 63 cents per shares on $1.5 billion in sales. Earnings grew 54% while sales increased 13% from the prior year.
Fortinet will report fourth-quarter results on Feb. 6. Analysts estimate that sales will increase 13% to $1.59 billion — in line with the company’s own outlook — with earnings of 61 cents a share, or 19% higher than the prior year.
Fortinet’s own outlook calls for earnings of 60 cents a share. For the full year, the company predicts $5.9 billion in sales with earnings of $2.24 per share. Meanwhile, analysts polled by FactSet expect $2.25 a share in earnings for 2024 and $2.42 a share in 2025.
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Mutual funds own 48% of outstanding shares. In the IBD mutual fund index, the Fidelity Contrafund (FCNTX) holds shares of the cybersecurity leader.
Fortinet stock also holds an Accumulation/Distribution Rating of B which shows that more funds have been net buyers over the past two quarters and in the most recent thirteen weeks. Further, over the past 50 trading days, demand for the stock has been strong as well, going by its Up/Down Volume Ratio of 1.5.
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