Now, in february i put out a patriot notice, an alert so to speak, about a company called fortinet ftnt, a cyber security company out of california. The company was then priced at 148 dollars, and i told you that i think it is extremely undervalued. My target price was 260 dollars and people kind of laughed at me for getting too bullish on this company, but now only five months later we not only hit the target price. It blew right past.

It like it was a semi track on the way to a convention of burgers. I mean that was pretty much crazy, that's 275 dollars, which is the current price of the stock. At this moment - and i don't know where it's headed - i don't know - what's going to happen with the stock, but whenever we have a stock that blasts through our target price, we have to be analytical about it. We're not gon na get emotional we're gon na make a full analysis to see if this stock is worth hanging on to beyond 275, or is it time to take profits and sell? It's completely analytical emotion, free and it's not going to be any hoo-ha and haha.

Just based on the numbers, so, let's get to it, my name is tom nash and i quit my corporate job as a senior financial analyst to break down companies for you there's one thing you need to know about me: i don't take from anybody. So, first of all, thank you for staying with me. If this is your first time on our channel, don't click, nothing, don't smash, nothing don't buy! Nothing! Don't subscribe to nothing. All of this is irrelevant.

Just give me your attention. Everything else is irrelevant now in case you don't know me, my name is tom. I used to be a senior financial analyst for over a decade, but now i'm 100 on youtube. Talking to you about the stocks economics, sometimes even about fake gurus, which is a video.

I did yesterday, which was kind of funny. I brought it back from retirement, but essentially i want to give you the best information without the bias that i see in mainstream media. That's why i started this channel and in this video we're talking about fortinet ftnt, a cyber security company that was initially in one of my alerts for my patreon community on february, 2nd. If i'm not mistaken, and in that alert, i told you that the company is overvalued, and now it blew past the target price.

Now, if you're new on this channel, this is how we operate. Whenever we have a company blowing past the target price we sit down. We do a full analysis, a full dcf, and we try to figure out if there's any fundamental base justification to raise the target price and hold on to the stock, or is it time to sell. Now, just a few days ago, we made a similar video about nvidia and we decided to get out at close to 200..

Now, let's see what happens with fortinet and again, if you're new - here, you probably haven't seen this before, but i'm about to give away the ending of this movie right in the beginning. I don't like to hold you hostage, so the bottom line in my videos comes first every single time, and the only thing i ask in return is that you don't click, nothing, don't smash, nothing don't buy. Nothing just give me your attention. So here's the thing fortinet is a company out of california that was traditionally kind of lagging behind.

It wasn't as innovative as the new kids on the block, but lately they're like this uncle, who just decided to quit his corporate job as an accountant and start an etsy shop. That's pretty much what happened! They moved away from the hardware into cloud and cyber security and that paid off big time, because this is one of the best industries to be in right now and for the next five years. I've been very vocal about it and that led to the insane run that the stock had over the past year over 103, almost 104 percent over the course of the year. Now we got on most of it and we got about 86 percent, but some people even got better so good for them.

The question is: is now a good price to get in or is now a good price to get out? So here's the deal, the fundamentals of fortinet are amazing: it's profitable, it's growing, the business is going phenomenally well and that's the big problem in fortinet. Everybody knows about it, and now they drove the price way beyond where it should be, and, in my opinion, this company, even if you consider a 35 annual growth from here on for the next five years, which is very aggressive, you're still getting about 260 dollars per Share there's no fundamental justification to pay 275 for the stock, because, even at max assumptions of max profitability, this is a 260 dollar stock. So the 275 is, i think, pure hype, and i think it's a good time to get out. That was the bottom line.

If that's the only thing you needed from this video go right ahead, but if you want to see the analysis, you want to see why and potentially poke some holes. In my theory, you're more than welcome to stay grab, some coffee grab a beer and let's get started okay. So these are the highlights for fortinet before we dive deep. Let's look at the main numbers: it's a 45 billion company very low short interest, 1.5 extremely low, and it had a 104 run up over the course of the past year.

Now i'm not one to analyze charts, but this chart looks worse than my grandpa's alcohol consumptions. Over the past five years, this is insane now check this out and if you look at the growth pattern, this is where you see where they move more to software from hardware, because you can see the growth is. Definitely there. Twenty percent this year expected to remain course next year.

Maybe the growth is out of this world even for next year. This is extremely well run, especially when you consider how all this company is. This is one of the oldest players in the market and they're, showing startup level growth numbers. This is impressive, but that's the big problem with this company everybody's, seeing it everybody sees how good this company is, but that means that the price gets driven up way out of control.

I'm going to show you my dcf and i'm going to show you why i'm not paying a penny beyond 260 for this company, but hang on a second there's more before we go through my dcf. Just look at the multiples because the multiples tell the whole story here. This is a phenomenal company, i'm a huge bull, but look at this p gap. 93.

That's almost 180 percent overvalued. Look at this ev sales 15, which is 250 percent of our value. Ev sells forward 235 percent of the value ebitda trading 12 months 72, which is 250 overvalued. You see the drift price to sales 16 280 over value.

You can see clearly that this is a very good company, but it's been run up by people who actually agree with me to a whole new price level which doesn't get justified by the fundamentals. Let me show you so this is the main page for tip ranks and, as you can see right here, the tip ranks average price for fortinet is 242 dollars. Now i personally think that it's a bit on the low side. I have a 260 target price for this stock, but they're currently at 242, which is way lower than the current 275 dollars.

If you actually do a five-star analysis performance - and you only look at the top analyst - you can clearly see that the vast majority are seeing this company as overvalued. We have one here with 10 upside one here with seven percent upside, but mainly it's a negative now, if you scroll down here and you sort by analyst performance and you only let in the five-star analyst, you can clearly see that outside of these two guys, who Have 7.2 and 10.6 most of these analysts have a negative rating, essentially meaning that it's overvalued. Let's take a look at etai kidron, which is one of the main guys we actually cover on this channel, and this is his profile. I guess you never saw this guy before he's ranked number five in the nation out of seven thousand six hundred.

He is one of the best literally and if you take a look at his profile and you scroll all the way down, this is what he has for fortinet. Now he has a lot of buy ratings before buy, buy, buy buy and he was right every single time, three out of three ratings 100. He did 55, not as good as me on this stock. I did 86 but he's definitely been a ball.

But now he's saying that it's 20 overvalued, so it gives it to 225 price. I have it slightly higher, but in any case we both agree as well as every other analyst that we've seen here apart from two that's five stars and four and a half stars. So to speak, good analysts are definitely thinking that this company is overvalued, but why take their word? Let's go through the dcf and i'll show you why i think it's overvalued by about 15 and now let me show you this dcf. Now this dcf is based on a 35 annual growth presumption for the next five years for this company.

I have to explain to you how aggressive that is, that is maxing out the volume on your amplifier, like marty, mcfly in the back to the future movie. That's all the way up, so with that in mind, we're looking at a ten percent discount rate, four percent annual rate and an 80 percent ebitda multiple. What i did here, i used a blended rate 25 for software and 12 for pc hardware, and i put them in the middle around 18, and what we have here is the total valuation of 260 dollars, blended rate 216 for perpetual approach, 300 for the ebitda approach And you know i always like to blend them. Some people don't like to do it.

That's how i do things and i see a 260 target price and with that in mind, looking at the current price of 275 dollars, it's clear that this is a sale. Now, i'm in love with this company, i think that they're doing phenomenal work, they're really killing it. I'm absolutely bullish unfortunate, but every deal has its price and here's the story, even though i'm a huge fortinet fan and i'm a huge bull and i've been for the past five months, you can't say i'm bearish on this company. I love what they're doing.

I love the financials. I love the pivoting they're doing into software, but here's the problem not at any price. At a certain point. The market is going to make you an offer, which you can't refuse, and i feel the market is offering me that right now, 275 is good enough for me, based on my valuation, based on my dcf, that's about 15 over the max of what this company could Be again, i've been wrong before i'm, not the oracle, i'm just the guy on the internet, i'm not a financial advisor.

This is just an opinion, which means it might be. Inaccurate might be wrong, might be the ramblings of a madman. You still have to do your own research and find out if this is a good investment for you or not. This is just me sharing my opinion.

That's all it is thank you again for the channel members and the patrons this this year. The actual dcf that i ran for fortinet is going to be available to download on our patreon page and for channel members. So if you want to join it's five bucks per month, you'll be supporting the channel and you get access to a lot of cool perks. For example, we have a zoom call today at 2 pm eastern just for ages and channel members swing by.

If you join today and i'll see you tomorrow, in any case.