What happened
Shares of Fortinet (FTNT -2.17%) got a nice lift from a heavy hitter in the financial industry on Tuesday. After a white-shoe investment bank initiated coverage on the stock, it increased to close nearly 2% higher in price, on a day when the S&P 500 index basically was flat.
So what
Well before market open this morning, Goldman Sachs' Gabriela Borges launched her coverage of Fortinet. She initiated it with a buy recommendation at a price target of $73, implying potential upside of almost 20% over the shares' current level.
Borges said she is impressed with Fortinet's approach to its business, which centers on the simultaneous need for wide networking capabilities and security. She believes that the up-and-coming secure access service edge (SASE) cybersecurity approach is well served by the company and has fine potential for meaningful growth.
In her research note, Borges wrote, "With a balanced growth profile (at 15-20% 2022-2026) and profitability profile (we model EPS growth of 25% and note minimal dilution from stock based compensation at 6% of revenue), we view Fortinet as a steady compounder of returns in security."
Now what
The Goldman Sachs analyst's bullish take on Fortinet isn't an outlier these days. Last week, the company reported fourth-quarter results indicating quite a bit of strength, with revenue rising 33% over the same quarter of 2021, and adjusted earnings surging 76% higher. Guidance indicates that Fortinet's growth story is far from over.
The concept of cybersecurity is changing for many businesses as they increasingly deploy cloud computing. This trend in particular has been a driver of Fortinet's recent improvements; happily for the company and its investors, it shows no signs of fading away.
