UPDATE: Morgan Stanley Upgrades Fortinet on Improved Demand

In a report published Monday, Morgan Stanley analyst Keith Weiss upgraded Fortinet, Inc. FTNT to Overweight, with a $25.00 price target. According to the report, with FTNT's multiple of 16X CY14 FCF below the analyst's estimate of >20%+ FCF growth, an attractive risk / reward at current levels is seen for the company. “FTNT remains one of the best positioned to capitalize on this improved demand given the trend towards consolidated solutions and recent signs of improved execution — US commercial strength accelerating in Q3 to ~20% YoY, while service provider billings stabilized to low single digit growth,” the report noted. “We look for modest acceleration in FTNT's top-line in CY14 but several factors lead us to believe this could be conservative: 1) our survey work / channel checks point to a better security demand environment in CY14, 2) our field work indicates FTNT competes well for that demand as the shift towards consolidated solutions continues, and 3) with robust investments in sales capacity in CY13, productivity trends should continue to improve in CY14.” Some highlights from the report include: -”Better Billings Growth + Improved Margins = Accelerating FCF Growth.” -”Multiple Has Room to Move Higher.” FTNT closed Friday at $19.56.