Fortinet rises as Guggenheim upgrades after full-year guidance cut
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Fortinet (NASDAQ:FTNT) shares rose more than 2% in pre-market trading on Monday as investment firm Guggenheim upgraded the cybersecurity company despite the fact it cut its full-year guidance last week.
"While we recognize Fortinet faces several headwinds heading into the second half of the year, we do not believe the company is structurally impaired, nor do we believe its competitive positioning has deteriorated," analyst Raymond McDonough wrote in an investor note.
McDonough raised his rating on Fortinet (FTNT) shares to buy from neutral and put on a $70 price target.
The analyst noted that with Friday's 25% decline, there is the belief that risk is "at least partially priced in" and growth is likely to reaccelerate into next year. 
In addition, McDonough said that there is likely to be a product "digestion" period of about eight quarters, of which the company is likely three quarters into it. 
"To us, this does suggest [second-half] consensus Product revenue estimates are at risk, but we do expect this cyclical downturn to be steeper and shorter than the last (we update our model to reflect this after reviewing our 2024 estimates in detail)," McDonough added. "This is not only due to backlog dynamics creating a headwind going forward (and conversely easier comparisons in 2H24), but also the fact that Fortinetâs business is different today than it was in the past." 
Fortinet (FTNT) also has a differentiation in its technology that has created a "sustainable moat," as competitors like Palo Alto Networks (PANW), Cisco (CSCO) and new entrants into the secure access service edge market like Microsoft (MSFT) and Zscaler (ZS), McDonough explained. 
Analysts are largely bullish on Fortinet (FTNT). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates FTNT a HOLD. 
More on Fortinet

Fortinet, Inc. Q2 2023 Earnings Call Transcript
Fortinet: Something To Watch For With Earnings Around The Corner
Fortinet: Navigating Second Half Of 2023 Through Cybersecurity Resilience
Fortinet: Long-Term Winner With Concerning Near-Term Outlook