JEF
Fortinet heads into earnings with product growth in the spotlight
Article Summary
BUY- Fortinet Inc. (NASDAQ: FTNT) is set to report second-quarter results on July 29, with Jefferies analysts highlighting that Jefferies Financial Group needs to show acceleration in product revenue growth to support investor confidence in the durability of recent performance.
- The firm expects solid product trends driven by price increases and improving channel checks, but wrote that investors will be looking for evidence momentum can extend beyond the near term.
- Jefferies expects product revenue to strengthen from the first quarter as Fortinet benefits from full quarter of higher pricing and improving demand trends, while channel checks indicate healthy firewall demand despite inventory constraints and longer appliance lead times.
- The company's average performance versus plan improved to 2.3% above plan in the second quarter from 0.5% below plan in first quarter, outperforming the average across cybersecurity vendors, while its SASE business continues expanding bundled offerings.
- Margins are expected to remain solid, supported by lower-cost inventory and price increases, though rising memory costs and longer procurement cycles may weigh on margins later this year.
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Growth Stock Scoring Breakdown
| METRIC | VALUE | WEIGHT | ANALYSIS |
|---|---|---|---|
| Sales Growth TTM ? | 29.7% | 25% | 75.0 ptsVery Good (29.7%) - Solid growth |
| EPS Growth Next 5Y ? | 24.0% | 25% | 70.0 ptsGood (24.0%) - Solid outlook |
| Target Price Upside ? | 15.9% | 20% | 60.0 ptsModerate Upside (15.9%) - Target: $64.40 vs Current: $55.58 |
| Gross Margin % ? | 91.2% | 15% | 100.0 ptsExceptional (91.2%) - Strong pricing power |
| Drawdown from 52-Wk High ? | -21.8% | 15% | 40.0 ptsMild Pullback (-21.8%) - Light entry opportunity |
Disclaimer: This rating is for informational purposes only and is not financial advice.
All data sourced from Finviz.
Always conduct your own research and consult with a financial advisor before making investment decisions.
Past performance does not guarantee future results.
About JEF
- Jefferies Financial Group Inc. operates as an investment banking and capital markets firm in the Americas, Europe, the Middle East, and the Asia-Pacific.
- It operates in two segments, Investment Banking and Capital Markets, and Asset Management.
- The company provides investment banking and advisory services for mergers or acquisitions, debt financing, restructurings, and private capital advisory transactions; underwriting and placement services related to corporate debt, municipal debt, mortgage-backed and asset-backed securities, equity and equity-linked securities, and loan syndication services; and corporate lending services.
- It also offers financing, securities lending, and other prime brokerage services; equities research, sales, and trading services; wealth management services; and online foreign exchange trading services.
- In addition, the company provides investment-grade distressed debt securities, U.S. and European government and agency securities, municipal bonds, leveraged loans, emerging markets debt, interest rates, and credit index derivative products; and manages and offers services to a diverse group of alternative asset management platforms across a spectrum of investment strategies and asset classes.
- It serves public companies, private companies, sponsors and owners, institutional investors, and government entities.
- The company was formerly known as Leucadia National Corporation and changed its name to Jefferies Financial Group Inc. in May 2018.
- Jefferies Financial Group Inc. was founded in 1962 and is headquartered in New York, New York.