In a tale of two cybersecurity companies that topped expectations with earnings, Symantec Corp. saw shares surge while Fortinet Inc. saw its stock plummet on Friday, and it all appears to be about expectations and valuations.
Symantec SYMC, +4.11% shares rallied to an intraday high of $20.60 and were last up 5.9%. Late Thursday, Symantec’s quarterly results topped Wall Street results after having closed at $18.73, a 33% decline over the course of 2018.
Fortinet FTNT, -13.30% shares dropped to an intraday low of $71.83 and were last down 13%. Late Thursday, the company’s third-quarter results topped Wall Street estimates, but from analyst takes, the plunge appears to be a “sell the news” event. Unlike Symantec shares, however, Fortinet’s stock has been one of the hottest cybersecurity stocks of late, with a 92% rally on the year before the earnings report.
“The challenge for [Fortinet] stock is that the expectations for the strong quarter were very high going into the print,” said J.P. Morgan analyst Sterling Auty, who has a neutral rating and a $93 price target on Fortinet. “So we would not be surprised to see a sell-the-news type of reaction.”
Others like Cowen analyst Gregg Moskowitz, who has a market perform rating on Fortinet and a $69 price target, questioned whether the company can keep up the results.
“We believe Fortinet’s competitive positioning remains very sound, although we’re uncertain as to whether the company can sustain its strong momentum going forward, and valuation isn’t cheap,” Moskowitz said.
UBS analyst Fatima