Fortinet Surges 18.5% Since Q3 Results: Time to Buy the Stock?

Wednesday, November 13, 2024

We start this mid-week trading day in the pre-markets with important inflation data: the Consumer Price Index (CPI) for October. Results were in-line with expectations across the board (see below for details) and pre-market futures had initially gathered steam on the indexes.

As it happens, a few minutes after the CPI report release, the Dow had jumped above +80 points from around +50; it’s back at +65 currently. The S&P 500 — which broke a five-day winning streak that brought record closing high after record closing high — is up 10 points at this hour. The Nasdaq is up +30 points right now.

October CPI In-Line with Estimates; December Cut Looks OK

Headline CPI month over month came in at +0.2%, in-line with expectations and the September print. Stripping out volatile food and energy prices, core CPI month over month reached +0.3%, also in-line with both the consensus and the prior month.

Year-over-year headline CPI — aka the “Inflation Rate” — rose 20 basis points (bps) from September to +2.6% for last month, which was also as expected. And while this is a couple ticks up, contextually it’s no big deal: consider we were at +3.7% in September of 2023 and 40-year highs of +9.1% in June 2022. Core CPI year over year was in-line with expectations and the previous month at +3.3%.

These days, economic reports are always measured by their probability of affecting the Fed’s dot-plot on interest rates. Ahead of this morning’s CPI numbers, odds were waning that the Fed would keep its intended -25 bps cut at its December 18th meeting. Those odds have gotten somewhat better, removing a bit of the “threat” that the Fed might pass on bringing rates from their current range of +4.50-4.75%.

That said, there is a lot of economic data to come between now and mid-December. But common wisdom seems to be that in-line numbers won’t alter the Fed’s current plans. What it means for further cuts in 2025, however, especially with new economic policy initiatives from a second President Trump term, is very much in question.

Zacks Rank #1 (Strong Buy) CyberArk Trounces Q3 EstimatesIsrael-based software firm CyberArk CYBR has outperformed estimates on its bottom line for Q3 by a wide margin this morning: earnings of 94 cents per share more than doubled the 45 cents expected (for a positive earnings surprise of +108.9%). Revenues of $240.1 million in the quarter also outpaced expectations, +2.65%. This morning’s report even bettered the trailing four-quarter moving average of +89% earnings beats. The company has only underperformed on earnings once in the past five years. Shares are up slightly on the news in the pre-market, and +39% year to date. For more on CYBR’s earnings, click here.Check out the updated Zacks Earnings Calendar here.

What to Expect for Hump Day in the Stock Market

A slew of Fed participants will share their views on the economy in light of the new CPI data after today’s open. Thy include Minneapolis’ Kashkari, New York’s Williams, Dallas’ Logan, St Louis’ Musalem and Kansas City’s Schmid. We’ll also get a new monthly federal budget this afternoon prior to the closing bell, expecting to sink to -$243 billion from -$67 billion posted a month ago.

After the close, fiscal Q1 results from Cisco Systems CSCO are expected to come in -21% on earnings from a year ago and -6% on its top line. (Cisco literally never misses on earnings.) Also, Brazilian digital banking company Nu Holdings NU is anticipated to bring +40% gains on both top and bottom lines in Q3 this afternoon.

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Zacks Investment Research

Here are three stocks with buy rank and strong momentum characteristics for investors to consider today, November 13:

Toast, Inc. TOST: This cloud-based digital technology platform provider has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 20% over the last 60 days.

Toast, Inc. Price and Consensus

Toast, Inc. price-consensus-chart | Toast, Inc. Quote

Toast's shares gained 59.1% over the last three months compared with the S&P 500’s advanced of 9.7%. The company possesses a Momentum Score of A.

Toast, Inc. Price

Toast, Inc. price | Toast, Inc. Quote

Fortinet, Inc. FTNT: This cybersecurity and convergence of networking and security solutions provider has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 7% over the last 60 days.

Fortinet, Inc. Price and Consensus

Fortinet, Inc. price-consensus-chart | Fortinet, Inc. Quote

Fortinet's shares gained 36.2% over the last three months compared with the S&P 500’s advanced of 9.7%. The company possesses a Momentum Score of A.

Fortinet, Inc. Price

Fortinet, Inc. price | Fortinet, Inc. Quote

Payoneer Global Inc. PAYO: This financial technology company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 28% over the last 60 days.

Payoneer Global Inc. Price and Consensus

Payoneer Global Inc. price-consensus-chart | Payoneer Global Inc. Quote

Payoneer Global's shares gained 54.3% over the last three months compared with the S&P 500’s advanced of 9.7%. The company possesses a Momentum Score of A.

Payoneer Global Inc. Price

Payoneer Global Inc. price | Payoneer Global Inc. Quote

See the full list of top ranked stocks here

Learn more about the Momentum score and how it is calculated here.

Zacks Investment Research

CrowdStrike Holdings, Inc. CRWD has staged an impressive comeback, with shares rallying 34% over the past three months. This surge follows the significant dip in its share price triggered by the global IT outage on July 19, 2024.

CRWD stock has outperformed the Zacks Internet - Software industry and the S&P 500 index’s rise of 16.2% and 10%, respectively, in the past three months. It has also fared better than other cybersecurity players, including Palo Alto Networks PANW, CyberArk Software CYBR and Check Point Software CHKP. Shares of Palo Alto Networks and CyberArk Software have soared 17.1% and 9.1%, respectively, while Check Point Software stock has declined 3.4% during the same time frame.

3-Month Price Return Performance

It doesn't matter if you're a growth, value, income, or momentum-focused investor -- building a successful investment portfolio takes skill, research, and a little bit of luck.

How do you find the right combination of stocks that will generate returns that could fund your retirement, or your kids' college tuition, or your short- and long-term savings goals?

Enter the Zacks Rank.

What is the Zacks Rank?

A unique, proprietary stock-rating model, the Zacks Rank uses earnings estimate revisions, or changes to a company's earnings expectations, to help investors create a winning portfolio.

There are four main factors behind the Zacks Rank: Agreement, Magnitude, Upside, and Surprise.

Agreement is the extent to which all brokerage analysts are revising their earnings estimates in the same direction. The greater the percentage of analysts revising their estimates higher, the better chance the stock will outperform.

Magnitude is the size of the recent change in the consensus estimate for the current and next fiscal years.

Upside is the difference between the most accurate estimate, which is calculated by Zacks, and the consensus estimate.

Surprise is made up of a company's last few quarters' earnings per share surprises; companies with a positive earnings surprise are more likely to beat expectations in the future.

These four factors are assigned a raw score that's recalculated every night, which is then compiled into the ranking system. Stocks are classified into five groups using this data, ranging from "Strong Buy" to "Strong Sell."

The Power of Institutional Investors

The Zacks Rank also allows individual investors, or retail investors, to benefit from the power of institutional investors.

These professionals manage the trillions of dollars invested in hedge funds, mutual funds, and investment banks, and studies have shown that they can and do move the market because of the large amounts of money they invest with. Thus, the market tends to move in the same direction as institutional investors.

In order to determine the fair value of a company and its shares, institutional investors design valuation models that focus on earnings and earnings estimates. Because if you raise earnings estimates, it then creates a higher fair value for a company and its stock price.

Institutional investors then act on these changes in earnings estimates, typically buying stocks with rising estimates and selling those with falling estimates; an increase in earnings estimates can translate into higher stock prices and bigger gains for the investor.

Since it can often take weeks, if not months, for an institutional investor to build a position (given their size), retail investors who get in at the first sign of upward earnings estimate revisions have a distinct advantage over these larger investors, and can benefit from the expected institutional buying that will follow.

Not only can the Zacks Rank help you take advantage of trends in earnings estimate revisions, but it can also provide a way to get into stocks that are highly sought after by professionals.

How to Invest with the Zacks Rank

The Zacks Rank is known for transforming investment portfolios. In fact, a portfolio of Zacks Rank #1 (Strong Buy) stocks has beaten the market in 26 of the last 32 years, with an average annual return of +25.41%.

Moreover, stocks with a new #1 (Strong Buy) ranking have some of the biggest profit potential, while those that fell to a #4 (Sell) or #5 (Strong Sell) have some of the worst.

Let's take a look at

Fortinet (FTNT)

, which was added to the Zacks Rank #1 list on November 13, 2024.

Headquartered in Sunnyvale, CA, Fortinet, Inc. is a provider of network security appliances and Unified Threat Management (UTM) network security solutions to enterprises, service providers and government entities worldwide.

13 analysts revised their earnings estimate upwards in the last 60 days for fiscal 2024. The Zacks Consensus Estimate has increased $0.17 to $2.18 per share. FTNT boasts an average earnings surprise of 23.6%.

Earnings are forecasted to see growth of 33.7% for the current fiscal year, and sales are expected to increase 10.9%.

Even more impressive, FTNT has gained in value over the past four weeks, up 20% compared to the S&P 500's gain of 3%.

Bottom Line

With a #1 (Strong Buy) ranking, positive trend in earnings estimate revisions, and strong market momentum, Fortinet should be on investors' shortlist.

If you want even more information on the Zacks Ranks, or one of our many other investing strategies, check out the Zacks Education home page.

Discover Today's Top Stocks

Our private Zacks #1 Rank List, based on our quantitative Zacks Rank stock-rating system, has more than doubled the S&P 500 since 1988. Applying the Zacks Rank in your own trading can boost your investing returns on your very next trade. See Today's Zacks #1 Rank List >>

Zacks Investment Research

Cisco Systems Inc. has been making waves with a rally of 16.23% year-to-date and a notable 8.18% rise in the past month. With first-quarter earnings set to be announced on Wednesday after market close, the buzz is thick on Wall Street. Analysts expect an EPS of 87 cents and revenues to hit $13.77 billion.

But with so much upward momentum, will Cisco manage to stay in bullish territory?

JPMorgan Sees Room For Growth Despite Recent Gains

JPMorgan certainly thinks so. On Monday, the investment firm upgraded Cisco to Overweight and boosted its price target from $55 to $66, emphasizing robust demand in enterprise networking.

According to JPMorgan, despite the post-earnings pop following the Q4 report, Cisco still has room to rise, driven by expanding AI-native infrastructure and new partnerships like the one with LTIMindtree for global SASE solutions.

This partnership is set to bolster Cisco's footprint in secure hybrid work solutions, a strong tailwind in the current market.

The company also introduced its next-gen Wi-Fi 7 access points—AI-driven and optimized for smart spaces. These products are part of Cisco’s advanced networking lineup, built to provide seamless connections and meet the demands of both in-office and remote environments.

Read Also: Cisco Q1 Earnings Preview: EPS, Revenue Beat Streak In Focus As Analysts See Potential ‘Large-Cap Breakout’

CSCO Stock Charts Indicate Bulls Are In Control

Cisco's technicals suggest a stock riding a powerful bullish wave.

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Chart created using Benzinga Pro

With its price sitting comfortably at $58.71, above its five, 20 and 50-day exponential moving averages, the trend points north. The stock's eight-day simple moving average sits at $57.76, its 20-day SMA at $56.66, and its 50-day SMA at $53.82—all below its current price, signaling bullishness across the board.

However, there are hints of caution. Cisco's Relative Strength Index (RSI) of 76.37 lies in overbought territory. Meanwhile, the Moving Average Convergence/Divergence (MACD) of 1.30 provides further bullish reinforcement but raises questions about potential pullbacks.

The setup implies strong upside momentum, yet investors may want to keep a close eye on earnings. If Cisco meets or exceeds forecasts, the stock could continue its ascent—but any surprises might bring a quick reality check.

Cisco bulls are in control for now, but with earnings on deck, it's time to see if the networking giant can keep this pace.

Read Next:

• Dow, S&P Decline Ahead Of Key Inflation Data, Tesla, Trump Media Slides: Fear Index Remains In ‘Greed’ Zone

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