Yahoo Finance Fortinet, Inc. Just Recorded A 32% EPS Beat: Here's What Analysts Are Forecasting Next
It's been a sad week for Fortinet, Inc. (NASDAQ:FTNT), who've watched their investment drop 15% to US$110 in the week since the company reported its quarterly result. It looks like a credible result overall - although revenues of US$651m were what the analysts expected, Fortinet surprised by delivering a (statutory) profit of US$0.75 per share, an impressive 32% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Fortinet
Following the latest results, Fortinet's 24 analysts are now forecasting revenues of US$2.96b in 2021. This would be a major 21% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to shrink 5.1% to US$2.59 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$2.92b and earnings per share (EPS) of US$2.49 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
There's been no major changes to the consensus price target of US$139, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Fortinet, with the most bullish analyst valuing it at US$170 and the most bearish at US$102 per share. 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.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Fortinet'shistorical trends, as next year's 21% revenue growth is roughly in line with 18% annual revenue growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 13% next year. So although Fortinet is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Fortinet's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$139, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Fortinet. Long-term earnings power is much more important than next year's profits. We have forecasts for Fortinet going out to 2024, and you can see them free on our platform here.
You still need to take note of risks, for example - Fortinet has 1 warning sign we think you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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