Fortinet Inc. (FTNT) May Receive 44% Premium From Technology Powerhouse

Shares of Fortinet Inc. (FTNT) have rebounded from session lows following an AsianSweeper article, stating that “Indian technology powerhouse Wipro is looking to expand its North American presence and Fortinet could be ideal strategic addition.”

FTNT began trading this morning at $27.27 from the prior days close of $27.77. On an intraday basis it has gotten as low as $26.88 and as high as $27.72.

The publication finds that Fortinet, “the current revenue leader in unified threat management (UTM) is a perfect fit, as two companies already have existing synergies in certain areas.” Furthermore, the article states that from a valuation measure, “the aim should be around 8.7 – 8.8x the 2014 estimated revenue, valuing the potential deal at $6.49 – $6.56 billion, or roughly $40 per share,” implying 44.71% premium to Fortinet’s current share price/$27.64.

FTNT shares are currently priced at 153.22x this year’s forecasted earnings compared to the industry’s 7.16x earnings multiple. The company’s current year and next year EPS growth estimates stand at (2.10%) and 25.50% compared to the industry growth rates of 13.80% and 22.50%, respectively. FTNT has a t-12 price/sales ratio of 6.33. EPS for the same period registers at $0.18.

FTNT shares have advanced 4.52% in the last 4 weeks and 6.77% in the past three months. Over the past 5 trading sessions the stock has gained 1.72%. Shares of $4.55 billion market cap Fortinet Inc. are up 53% YoY and 45.16% year-to-date.

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