NEW YORK (AP) — Network security provider Fortinet's stock rose Wednesday as an analyst upgraded the company's rating and price target partly on the likelihood that security spending will improve.
THE SPARK: Jefferies' Aaron Schwartz raised Fortinet Inc. to "Buy" from "Hold" and increased its price target to $23 from $20.
THE ANALYSIS: Schwartz said in a client note that security spending seems to be getting better, with 44 percent of respondents to a recent survey saying it was better than planned. This is up from 33 percent in the first quarter.
The analyst also feels that the appointment of Ahmed Rubaie as chief financial officer in April should help. Rubaie replaced Ken Goldman, who went to the same post at Yahoo Inc. in October.
"We believe the management change will bring broader operational discipline, which should improve sales consistency, aid the company as it continues its large enterprise expansion and bring a more balanced growth-reinvestment mix leading to sustainable margin expansion from multi-year lows in the first half of the year," he wrote.
A representative for Fortinet did not immediately respond to an email seeking comment.
SHARE ACTION: Up 99 cents, or 5.3 percent, to $19.68 in afternoon trading. Shares of the Sunnyvale, Calif.-based company have traded between $16.47 and $28.23 over the past year. Year to date, the stock is down 11 percent.