Palo Alto Networks Inc (PANW): Can Fortinet Inc (FTNT) Hold Its Momentum?

Profitability was also strong, up 21% year over year and beating Street estimates by $0.02. While Check Point is indeed the market leader, the company posted only 9% growth in net income. It’s hard to not see that Fortinet is gaining market share at Check Point’s expense. And if Fortinet Inc (NASDAQ:FTNT)’s guidance was any indication, management believes that market share growth will continue.

The company expected full-year revenue to arrive in the range of $625 million to $635 million — ahead of Street forecasts of $618.9 million. This includes first-quarter revenue projections of $141 million, which would represent 20% growth year over year. Conversely, Check Point disappointed analysts with a first-quarter revenue range of $355 million to $387 million, which implies 13% growth. While that’s not a bad number, it doesn’t signal outperformance, either — especially in a sector where relative performance is closely monitored.

Sleeping with one eye open
The stock is far from cheap. But there’s still a lot to like here. Customers love Fortinet Inc (NASDAQ:FTNT)’s technology, and the company is growing revenue at a 20% rate. Plus, with cloud platforms not yet fully understood, companies are feeling insecure about sending their “Big Data” into cyberspace, which means that the market should expand. Management fully expects that Fortinet will expand along with it.

The competition, however, has no plans to be steamrolled. And I believe Check Point is one good acquisition away from being truly exciting. In that regard, Palo Alto Networks Inc (NYSE:PANW) may be Check Point’s perfect defense against Fortinet. In the meantime, though, Fortinet Inc (NASDAQ:FTNT)’s long-term revenue growth has shown no meaningful signs of slowing down, and neither has cash flow. Besides, with a strong management team keeping watch, investors can sleep a little bit better.

The article Can Fortinet Hold Its Momentum? originally appeared on Fool.com and is written by Richard Saintvilus.

Fool contributor Richard Saintvilus owns shares of Apple. The Motley Fool recommends Apple, Check Point Software (NASDAQ:CHKP) Technologies, Facebook, and Sourcefire and owns shares of Apple, Check Point Software Technologies, Facebook, and Microsoft.

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