Cybersecurity stock Fortinet (FTNT) holds an analyst day on Monday where it's expected to tout its "SD-WAN" computer networking strategy as customers shift to cloud computing. Fortinet stock has been on a roll since it reported third-quarter earnings that topped views.
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Sunnyvale, Calif.-based Fortinet's stock has jumped some 24% since it reported earnings on Oct. 31. With the gain, the cybersecurity stock is about 9% above an entry point of 92.89, so it could be extended after breaking out of a cup-type base in heavy volume.
Fortinet stock has shot up some 38% from a year ago. The cybersecurity stock ranks No. 10 in the IBD 50 roster of fast growing companies.
Reaction to the Fortinet analyst day in New York City could test whether it's time to take profits in the cybersecurity stock.
"We expect Fortinet to emphasize its security-driven networking messaging at its second-ever analyst day," UBS analyst Fatima Boolani said in a report to clients. The analyst day coincides with the 10th anniversary of Fortinet's initial public offering a decade ago.
Fortinet Stock: SD-WAN Sets It Apart In Cybersecurity
Boolani added: "Given persistent investor skepticism on Fortinet's ultimate positioning in cloud, hybrid and distributed IT architectures, we also anticipate detailed debunking of FTNT's perceived challenges, with SD-WAN the likely discussion hallmark."
Fortinet competes with Palo Alto Networks (PANW) and others in the firewall security market. Firewalls protect computer networks by blocking online intrusions and monitoring web-based apps.
As large companies shift to off-premise cloud computing services, one view is that firewall technology will play a lessor role. However, Fortinet has developed products that plug in to software-defined wide area networks, or SD-WANs, an emerging computer infrastructure.
Cybersecurity Stock Faces Test On Computing Shift
"We continue to see an architectural shift to cloud diminishing the relevance of traditional network security, but it's hard to ignore how well Fortinet has navigated around this," Credit Suisse analyst Brad Zelnick said in his note to clients. "The company has levered its architectural advantage to become a significant player in the rapidly growing SD-WAN market, extending its core competency."
Zelnick holds a neutral rating on Fortinet stock. UBS's Boolani also rates Fortinet stock neutral on valuation. But Boolani is upbeat on SD-WAN and Fortinet's view of cloud computing.
"We've generally leaned bullish and earlier than most on SD-WAN as an underappreciated product growth driver, and believe FTNT's tangible success here — manifesting in sustained teens-plus product growth — appears to be garnering more credit from investors," she said.
With SD-WAN, companies have less need for costly private data networks leased from telecom companies. But along with the SD-WAN savings comes an increased security risk from data going over the public internet.
Fortinet stock rose 1.4% to 101.54 on the stock market today.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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