Fortinet stock prediction after topping FQ3 estimates

On Friday, Fortinet Inc. (NASDAQ:FTNT) shares edged lower 1.6% after reporting its fiscal third-quarter results. The company announced its most recent quarterly results Thursday after markets closed, beating the consensus for analyst estimates on revenue and earnings. FTNT also issued FQ4 revenue guidance ahead of Street expectations while non-GAAP earnings lagged estimates.

The company posted FQ3 non-GAAP earnings per share of $0.99, beating the average for analyst expectations of $0.94. On the other hand, its GAAP EPS of $0.97, outperformed Street expectations by $0.24, while revenue for the quarter grew by 33.2% from the same quarter in 2020 to $867.2 million, surpassing analyst expectations by $54.99 million.

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Fortinet also issued FQ4 revenue guidance in the range of $940 million to $970 million, beating the Street forecast of $916.71 million, while its non-GAAP earnings guidance of $1.10-$1.15, lagged the Street estimate of $1.16.

Is Fortinet overvalued?

From an investment perspective, Fortinet shares trade at steep trailing 12-month and forward P/E ratios of 109.16 and 75.28, respectively. Therefore, value investors could opt for alternatives in the market.

On the other hand, analysts expect its earnings per share to increase by 54.70% this year, before rising at an average annual rate of 16.62% over the next five years.

Therefore, FTNT shares could gain the attention of long-term growth investors.

Technically, Fortinet shares seem to be trading within an ascending channel formation in the intraday chart. However, the stock pulled back on Friday after finding the trendline resistance, thus creating room for a potential rebound.

Therefore, with shares yet to reach overbought conditions, investors could target potential rebounds at about $349.59, or higher at $363.48, while $320.27 and $306.39 are crucial support levels.

It could be time to take profits

In summary, although Fortinet shares pulled back on Friday to create an opportunity for a rebound, the stock is far from reaching oversold conditions, thus leaving room for more downward movement.

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