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Why Fortinet (FTNT) Could Be Positioned for a Slump


Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

One such stock that you may want to consider dropping is Fortinet Inc. FTNT, which has witnessed a significant price decline in the past four weeks, and it has seen negative earnings estimate revisions for the current quarter and the current year. A Zacks Rank #4 (Sell) further confirms weakness in FTNT.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 3 estimates moving down in the past 30 days, compared with no upward revision. This trend has caused the consensus estimate to trend lower, going from 22 cents a share a month ago to its current level of 14 cents.

Also, for the current quarter, Fortinet has seen 3 downward estimate revisions versus no revision in the opposite direction, dragging the consensus estimate down to 3 cents a share from 5 cents over the past 30 days.

The stock also has seen some pretty dismal trading lately, as the share price has dropped 13.4% in the past month.

FORTINET INC Price and Consensus

FORTINET INC Price and Consensus | FORTINET INC Quote

So it may not be a good decision to keep this stock in your portfolio anymore, at least if you don’t have a long time horizon to wait.

If you are still interested in the Computer – Integrated Systems industry, you may instead consider a better-ranked stock – Hewlett Packard Enterprise Company HPE. The stock currently holds a Zacks Rank #2 (Buy) and may be a better selection at this time. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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