Which Security Stock Could Be The Fortinet (FTNT) Of 2019?
Zacks Investment Research | Dec 27, 2018 08:24PM ET
Fortinet (NASDAQ:FTNT) has been one of the outstanding performers in the cyber-security space this year. The stock has appreciated 61% in the year-to-date period, outperforming the industry 's 19.1% rally, primarily driven by strong quarterly results.
Notably, this Zacks Rank #2 (Buy) company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average positive surprise being 17.4%. Fortinet also recorded significant top- and bottom-line year-over-year growth in these quarters.
The company is benefiting from strength in overall product suite of Security Fabric, which provides unified security across the entire digital attack surface. The digital transformation and security refresh cycle across most industries are tailwinds. Growing adoption of its Software-Define Wide Area Network (SD-WAN) solutions is also a positive.
We note that Fortinet’s experience in the security space and mission-critical solutions is helping it maintain and grow its market share in the booming cyber security space.
What’s Driving Security Stocks?
Frequent cyber-attacks have increased the demand for cyber security software. Protection against spear phishing, credential-based attack, account takeover and ransomware attacks among others is the need of the hour.
Moreover, although artificial intelligence (AI) is considered to be a key tool for countering cyber-attacks, its growing application across major sectors has made it vulnerable. Per cyber-security firm Symantec (NASDAQ:SYMC) , in 2019 and beyond, attackers are going to exploit AI systems and use the technology to aid assaults.
Encouragingly, cybersecurity companies will be the ultimate gainers due to the elevated spending on security by government and other enterprises. Notably, for cybersecurity-related activities in 2019, the U.S. government has allocated $15 billion (up $583.4 million from 2018). It is anticipated that spending on cybersecurity will continue to outpace other tech verticals next year.
A new survey report by Thales eSecurity points out that given the bigger threats and more sophisticated attacks, U.S. banks and other financial firms are likely to increase their cybersecurity spending in 2019.
Furthermore, per Gartner, global cyber security spending is expected to grow 8.7% to $124 billion in 2019 due to higher spending on General Data Protection Regulation (GDPR) and other privacy legislation.
Other Cyber Security Players to Watch Out For
Fortinet faces competition from numerous big and small players in the security application market. The competing firms are delivering prompt and advanced technologies to suit customer requirements and expediting product introduction in order to grow.
We have picked four stocks that have a Zacks Rank #1 (Strong Buy) or #2 (Buy) and Growth Score of A or B as the combination offers the best investment opportunities. You can see Original post
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