Fortinet NASDAQ:, Inc offers global, comprehensive, and fully automated cybersecurity solutions.

It offers its own products that protect against cyberattacks. The services offered include anti-malware and virtual private networks (VPN), firewall, filtering, spam, and other security features. The company also provides endpoint protection as well as wireless networking solutions. This company offers hardware as well as software.

Everybody is thinking about cybersecurity lately. Bad actors can target all types of organizations, large or small, government, school, hospital, and personal devices. Fortinet shares have performed exceptionally well in recent years due to its broad range of services and profitability.

I’m neutral about FTNT stock. (See Fortinet stock charts on TipRanks)

Growing Worldwide TAM

Fortinet is a better choice than some other newer cloud cybersecurity stocks like Cloudflare (NYSE), CrowdStrike(CRWD), Zscaler, and Cloudflare.

It’s established and is quite financially profitable. While the other businesses are spending large amounts on customer acquisitions, they won’t be GAAP profitable for several years.

Fortinet also has an international footprint, rather than relying on one location to generate the majority of its revenue.

Fortinet only received 42% from the Americas for Q2 FY21. Only 38% came from Europe, Africa and the Middle East (EMEA) as well as 20% from Asia Pacific (APAC). In contrast, CrowdStrike received 72% from just the United States during its Q2 fiscal year.

Fortinet’s ability to work internationally gives it a large and expanding total addressable market. According to Fortinet, its TAM is expected to grow by $107 billion in 2024. The company’s total revenue was $2.6 Billion in fiscal 2020. There are plenty of opportunities for growth.

There is also a danger from the newer players in cybersecurity. These startups have created and continue to develop SaaS platforms, innovative technologies and a strong revenue stream. Fortinet needs to continue its growth in order to maintain its leadership position.

Profitability in a Growing Sector

A positive feature of the Fortinet column? It is GAAP profitable, cash flow positive.

Fortinet boasts exceptional gross margins, hovering around 77-79%. With this margin, the company was able to achieve profitability and posted a 25% operating margin for Q2 FY21.

FTNT shares trade at more conservative valuations then the other stocks mentioned. FTNT trades at a forward stock price-to-sales ratio (PS) of 13.1x while others trade over 32x.

It is due to their high growth rate and potential future. Fortinet has a lower risk but is more stable. But, Fortinet has less upside potential.

Wall Street’s Take

Wall Street analysts seem to be bullish about FTNT stock. They have a Moderate Buy consensus rating based on 9 Buy, 8 Hold and 1 Sell recommendation.

The average Fortinet price target of $309.53 implies 3.5% upside potential.

Summary of Fortinet

Fortinet posts impressive margins every quarter and continues to make higher profits.

TAM for the company is huge and is growing. The industry is in strong demand.

Fortinet has a higher level of stability than its peers in high-growth who are yet to make profits. However, it is likely to have less upside being a long-standing player.

Disclosure: Bradley Guichard held a position at the time this article was published in Securities.

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