UPDATE: Nomura Reiterates Buy Rating, Raises PT on Fortinet Following Quarter Report

In a report published Wednesday, Nomura analyst Rick Sherlund reiterated a Buy rating on

, and raised the price target from $22.00 to $23.00. In the report, Nomura noted, “Product revenues were up 7.8%, in-line with our estimate and above the Street at up 4%. Service revenue were stronger at up nearly 22% versus the Street at up 18%. Total revenues were up 14% versus our estimate of up 12% and the Street at up 11%. Overall, the quarter showed progress in stabilizing the business and beating a bit on revenues and billings. New CFO and COO Ahmed Rubaie, after a quarter on the job, set the bar a bit lower for billings for this year and is increasing inventories to better satisfy customer orders, which reduces cash flow. There was some expectation on the Street for a guide lower, so this is not perhaps as bad as some might have expected. Shares of Fortinet trade at 16.4x EV/uFCF on our 2014 estimate and on a P/E basis trade at 36x 2014 estimated EPS of $0.56 per share. Our price target moves up modestly to $23 from $22 on the expectation that execution will improve with new management and the bar has been set at a more conservative level.” Fortinet closed on Tuesday at $2.017.