It's been a good week for Fortinet, Inc. (NASDAQ:FTNT) shareholders, because the company has just released its latest full-year results, and the shares gained 7.1% to US$69.95. It was a credible result overall, with revenues of US$5.3b and statutory earnings per share of US$1.46 both in line with analyst estimates, showing that Fortinet is executing in line with expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, Fortinet's 41 analysts are now forecasting revenues of US$5.79b in 2024. This would be a notable 9.1% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to dip 6.3% to US$1.41 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$5.79b and earnings per share (EPS) of US$1.41 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 21% to US$75.72. It looks as though they previously had some doubts over whether the business would live up to their expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Fortinet at US$90.00 per share, while the most bearish prices it at US$55.11. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Fortinet's revenue growth is expected to slow, with the forecast 9.1% annualised growth rate until the end of 2024 being well below the historical 23% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Fortinet.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Fortinet's revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Fortinet analysts - going out to 2026, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with Fortinet (including 1 which can't be ignored) .
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