The onset of COVID-19 brought another sort of planet-wide pandemic of sorts: an influx of cyber attacks. As countless individuals shifted to work-from-home and relied more heavily on video conferencing services and cloud storage options that weren’t exactly equipped to handle so many new users at once, it was a perfect storm for hackers to take advantage of the global tragedy for their own gain.
Naturally, the cybersecurity industry had to step up in a big way to combat this. One company in particular, cybersecurity giant Fortinet (FTNT), saw an enormous increase in revenue as a result of the COVID-19 pandemic. Having run to all-time highs in price recently, what is the Fortinet price prediction going forward?
Fortinet Financials
Fortinet saw a total revenue of $801.1 million for Q2 2021, which is a 30% increase year-over-year.
$298.3 million of that came directly from product revenue, which went up 41% compared to the second quarter of 2020.
The other $502.8 million came from Fortinet’s services, which is a 24% increase year-over-year.
This is all incredibly solid, and it just goes to show how much revenue went up for the cybersecurity industry as a whole as a result of the COVID-19 pandemic. But what else about Fortinet is driving up the company’s revenue? What is it about the company that could support long-term growth?
Fortinet’s New Pricing Options
With a majority of Fortinet’s revenue coming from services over product, the company is making those services more accessible to meet the financial needs of the new customer base.
Ken Xie, Founder, Chairman of the Board, and Chief Executive Officer of Fortinet, explained on the company’s Q2 2021 earnings call that these new pricing options were made specifically to appeal to those working remotely or working from home across multiple devices.
The speed at which Fortinet was able to adapt to meet the needs of its new customers shows that how flexible management can be in adapting to current market conditions.
A Change in Demand
Another driving force behind Fortinet’s recent success is the fine-tuning of the work from home environment. There wasn’t as much demand for Fortinet’s services last year because so much focus was simply being put on figuring out how to work from home in the first place.
Now that the work from home and remote work routine has been perfected for so many, there’s time to fix the cracks and the holes in cybersecurity while working from home. This has led to a huge change in demand for Fortinet’s cybersecurity products and services, and a demand that only continues to increase.
Issues With the Supply Chain
While plenty of positive forces have been mentioned, there are also negatives to consider — in other words, factors that have the potential to harm Fortinet’s recent success.
One of the largest is the supply chain and the disruptions that have completely thrown the supply chain into a state of chaos in recent months. Despite the company’s success, Fortinet is not immune to these issues with the supply chain.
Thankfully, Fortinet has been taking the steps to try and combat these supply chain issues. For example, the company has been working to increase inventory to avoid shortages, has explored manufacturing 52 weeks ahead in an effort to keep production moving along smoothly, and adjusted internal goals and estimates accordingly to account for these issues within the supply chain.
A Possible Decline in Demand
Another potential downside to Fortinet’s success as of late is a possible decline in demand. Eventually, people will begin to feel comfortable enough to return to the office and it’s possible that Fortinet could see its in-demand status decline somewhat.
If users were to begin canceling their Fortinet services or returning their Fortinet products because they were no longer needed, then this would absolutely have a negative impact on the company’s top and bottom lines.
It remains to be seen if this is something that Fortinet (and Fortinet investors) needs to be concerned about in the immediate future, but it could be a real threat in the long run.
Fortinet Stock Price Forecast
On the bearish side, some forecasters see Fortinet stock taking a turn for the worst over the next twelve months and potentially dropping down as low as $243 per share.
Bulls see Fortinet stock hitting an even greater high of $385 per share a year from now.
If we look purely at a discounted cash flow forecast analysis, the consensus estimate is for a price of $315 per share.
The Bottom Line: Fortinet Stock Prediction
Considering all the external factors working in Fortinet’s favor, all the potential hindrances that have the potential to trip up the company’s successful streak, and all the internal efforts being made to ensure continued success in the quarters to come, Fortinet’s fair market value seems to be largely baked into the share price.
In truth, nothing too drastic is likely to come along to completely overturn all that the company has worked so hard to achieve. Fortinet stock might not be destined for a skyward boom, but it also isn’t deserving of a sudden crash, either. Ultimately, Fortinet appears to be a steady stock that retail investors and traders should hold onto for the time being until a new downward trend reveals itself.
Over the past year and more, a clear bullish trend has emerged. It’s been steady and predictable, and highly appealing to conservative-minded investors who like a company that can weather economic cycles and forge relentlessly higher regardless.
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