01-19-2019, 11:36 AM
This company is a subscription revenue company. I have written several times in the past that the appropriate way of assessing the health of companies that sell their products on a subscription revenue basis is to look at their bookings and weight that performance far more than revenues..
Jan 4, 2019:
Goldman Sachs analyst Gabriela Borges downgraded Fortinet from Buy to Sell and lowered her price target from $95 to $59. The Thesis According to Borges, after a 7-percent upward revision to 2019 Wall Street revenue estimates, a 41-percent upward revision to EPS estimates and a 50-percent gain in share price, the bullish catalysts are likely all played out for Fortinet stock in the near term. “An elevated multiple relative to history and peers, coupled with the likelihood of decelerating product revenue over the next two years, suggests that at best, upside is priced in, and at worst, any volatility in estimates may also drive multiple compression,” Borges wrote in a note. Borges said the current firewall refresh cycle may be peaking, and Fortinet stock has a history of experiencing earnings multiple contraction during periods of product revenue growth declines.