The Cybersecurity Company Stepping Up Its Protection Game


The Cybersecurity Company Stepping Up Its Protection Game

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The threat of cybersecurity breaches turned into reality for several countries this week. Italy, France, Canada and the U.S. were hit with ransomware attacks that impacted thousands of the countries’ computer servers. Ransomware attacks are when hackers lock up a victim’s information and demand a payment to provide an encryption key. It can cost victims millions of dollars.

Hackers can gain remote access to servers by “phishing,” which allows the hackers to remotely install malware, or “malicious software.” Click on a link from a suspicious email and – boom – your computer is infected. Hackers use this malware to comprise devices, locking up a victim’s information while usually demanding payment to provide an encryption key.

Italy’s National Cyber Security Agency (ACN) said that the hackers targeted servers that run on a specific software. Luckily, no major institution or company was affected, although the criminal group has yet to be identified.

According to a survey conducted by Sophos, a security software and hardware company, ransomware attacks have increased 78% between 2020 and 2021 across 31 countries – with Italy as the most vulnerable European country.

Although cyberattacks have become more frequent, there are cybersecurity companies that develop protection against cybersecurity threats.

Fortinet, Inc (NASDAQ:FTNT) is one such company.

Fortinet provides unified security solutions that can be deployed over digital networks to protect users against malware, spam and network intrusions. The company provides its security solutions to data centers, enterprises, carriers and distributed offices around the globe. Fortinet currently boasts a portfolio of 1,285 issued patents and 250 pending patents.

Since its founding back in November 2000, Fortinet has had a meteoric rise. Over the past 23 years, it has shipped more security solutions than any other cybersecurity firm worldwide. It has sold more than nine million units of its security solutions, and it has a base of more than 615,000 customers. And since 2002, its revenues have more than doubled.

On Wednesday, the company announced that it will help Launch The Cybercrime Atlas initiative, which aims to bring global leaders together to fight cyberthreats and cybercrimes.

Derek Manky, Chief Security Strategist and VP of Global Threat Intelligence at FortiGuard Labs – the threat intelligence and research organization at Fortinet – said in a press release:

“Disrupting global cybercriminal organizations requires a global effort with strong, trusted relationships and collaboration across public and private organizations and industries. It is part of Fortinet’s mission to secure people, devices, and data everywhere…We are excited to continue our work with private and public sector leaders to help make our digital world a safer place.”

Fortinet Announces Stunning Q4 Earnings

I should add that Tuesday afternoon, Fortinet released its fourth-quarter earnings results, and they were stunning. Revenue increased 33.1% year-over-year to $1.28 billion, with product revenue accounting for $540.1 million and service revenue of $742.9 million. The company also had total billings of $1.72 billion in the fourth quarter, or a 31.6% year-over-year increase. Analysts expected total revenue of $1.29 billion.

Fourth-quarter earnings jumped 70% year-over-year to $349.7 million, up from $205.8 million in the same quarter a year ago. Earnings per share soared 76% year-over-year to $0.44 per share, which compared to $0.25 per share in the fourth quarter of 2021. Analysts expected earnings of $0.39 per share, so Fortinet posted a 12.8% earnings surprise.

Fortinet’s full-year 2022 results were equally impressive: The company reported total revenue of $4.42 billion and earnings of $961.6 million, or $1.19 per share, which represented 32.2% annual revenue growth and 44.4% annual earnings growth. Estimates called for earnings of $1.15 per share on $4.43 billion in revenue.

What really excited investors, though, was the fact that Fortinet provided guidance above the current consensus estimate. The company expects first-quarter revenue between $1.18 billion and $1.22 billion and earnings per share between $0.27 and $0.29. That compares to estimates for earnings of $0.27 per share and revenue of $1.18 billion.

For its fiscal year 2023, Fortinet forecast revenue between $5.37 billion and $5.43 billion and earnings per share between $1.39 and $1.41. The full-year forecast was also above analysts’ current estimates for earnings of $1.39 per share on $5.36 billion in revenue.

Following the company’s better-than-expected quarterly and yearly results, FTNT stock opened more than 16% higher on Wednesday. With that said, though, the stock currently has a C-rating in Portfolio Grader; so, I would not add new money to the stock just yet (though I wouldn’t be surprised if it’s upgraded to a B-rating soon following the massive move in the stock).

I believe that the best money-making opportunities right now lie within the energy sector. The fact remains that energy continues to post the strongest earnings results of all 11 S&P 500 sectors – which is important in a market environment where fundamentals matter. According to FactSet, the energy sector is forecast to post 57.7% earnings growth for the fourth quarter. The second-best earnings are expected to come from the Industrials sector, with 36.8% earnings growth. In comparison, the S&P 500 is anticipated to post a 5.3% earnings decline.

There are several other reasons why I like the energy sector – and I explain exactly why in today’s Growth Investor Weekly Update (which will be available to view shortly). For full details, sign up for Growth Investor today.

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Louis Navellier

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Fortinet Inc (FTNT)

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