Fortinet Stock Jumps as Cybersecurity Demand Drives Q4 Earnings Beat—Key Level to Watch

Fortinet, Inc.

Cybersecurity solutions company Fortinet, Inc. (FTNT) reported quarterly earnings and billings that came in ahead of Wall Street’s expectations, sending its shares up more than 5% in early trading Wednesday morning.

The Sunnyvale, California-based company posted an adjusted fourth-quarter profit of 51 cents per share, up from 44 cents a share in the year-ago quarter and easily surpassing analysts’ forecasts. Revenue for the period of $1.42 billion was in line with expectations and represented an increase of 10% from last year’s corresponding quarter.

Moreover, the company’s billings, a metric that captures deferred revenue, grew 8.5% year-over-year to come in at $1.86 billion, well above estimates, thanks to several large deals closing in the quarter.

During the earnings call late Tuesday, Fortinet said it had finalized six customer transactions valued at over $10 million each. The company’s better-than-expected quarterly results were “driven by our successful sales strategy shift and the improved execution of our sales teams,” said Fortinet founder and CEO Ken Xie.

Looking at the first quarter, Fortinet projects revenue of between $1.30 billion and $1.36 billion, with the top end of that range falling just shy of the average analysts’ estimate. However, the company sits well positioned to benefit from increased cybersecurity spending as enterprises allocate significant portions of their IT budgets to safeguard systems from rising online threats. Technology consulting firm Gartner projects cyber investment spending to reach $215 billion in 2024, up from around $188 billion last year.

Since gapping to a near multi-year low in early November, Fortinet shares have staged an impressive recovery to climb back above both the 50- and 200-day moving averages. If earnings-related buying continues in the days ahead, keep an eye on the July swing high—which also registers as the stock’s all-time high—as an area of potential chart resistance around $80.50. A volume-backed breakout above this important level could potentially mark the start of a new long-term trend higher.

Fortinet shares were up 5.5% at $71.18 about five minutes after the opening bell.

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As of the date this article was written, the author does not own any of the above securities.