I am still on the revision of my previous coverage of cybersecurity stocks, and we will revisit our coverage of Fortinet Inc. (NASDAQ:FTNT) today. Fortinet with its market capitalization of $6.52B provides network security solutions. Fortinet provides integrated and protection against security threats for enterprises, service providers and governmental entities worldwide.
Previous Fortinet Coverage
On February 13, I covered how to trade FTNT options when I was writing the series on “Cybersecurity Stocks on the Move”. In that post, I discussed how Fortinet might be a possible acquisition target, I talked about its impressive share price appreciation, and I delved into the company’s optimistic financial outlook. I concluded that piece by recommending a bullish trade with the FTNT Jun 2015 32.000 call (FTNT150619C00032000) at an asking price of $3.00.
When I wrote that February 13 article, the shares of Fortinet were trading around $32 per share and I effectively gave the stock a $35.00 price target with the call options that I recommended. The shares of Fortinet closed with 1.07% gains at $38.85 yesterday, to mark a 21.40% share price appreciation in three months.
As at market close yesterday, the options contract that I recommended had an asking price of $6.90 to mark a 130% growth in three months. I believe that the contract still has room to run higher in the next two weeks before I sell to close in the first week of June.
Fortinet in the News
Fortinet has been enjoying immense support and goodwill after it reported an incredible first quarter (Q1 2015) result on April 20. Highlights of the first quarter results are presented below:
Fortinet reported first quarter earnings as non-GAAP EPS of $0.08 to beat the consensus estimate by 33%. The reported EPS is also above the guidance range of approximately $0.06
The company reported revenue of $212.9M to mark a 26% year-over-year growth, and to beat the consensus estimate by 4%. The reported revenue outperforms the guidance range of $200M to $205M
The company reported that its quarter billings increased by 36% year-over-year to $254.3M, which is above the guidance range of $226 – $230M.
The company’s cash flow from operations came in at $64.6M and its free cash flow stood at $59.7M
Deals over $100,000 grew 36%. Deals over $250,000 grew 51%. Deals over $500,000 grew 28%
Overall, it was an incredibly successful quarter for Fortinet as the company ended the quarter with investments, cash, and cash equivalents of $1.07B.
How to Trade FTNT Options
The chart above shows how the shares of Fortinet have traded within the last one year. You’ll observe that the stock has soared 94.22% (almost doubling) from a 52-week low of $20.27 to a 52-week high of $39.37.
You’ll also notice the four resistance levels that the stock had encountered and overcame within the last one year. Fortinet has broken out above the $26 resistance, the $31.9 resistance, and the $35 resistance. The stock is currently experiencing a resistance at $38.5, I am confident that new highs will follow once Fortinet breaks out over that point.
I am bullish on Fortinet and I recommend buying FTNT call options. You should consider the FTNT Sep 2015 39.000 call (FTNT150918C00039000) at an asking price of $2.35.
— Daily Option Alerts