Security Sector Check Amid Fortinet's Q3 Warning

Analysts Gabriela Borges and Chelsea Jurman see the security sector having delivered mixed results for the September quarter after Fortinet reduced its billing forecast by 8 percent. The analysts think this was due to strengthening deal cycles despite challenges faced in North America.

Related Link: Analysts Remain Bullish On Barracuda Networks

However, the brokerage pointed out that Barracuda Networks Inc CUDA delivered more stable fundamentals for the August quarter with the billings exceeding the Street estimates by 3 percent. This was attributed to solutions for public cloud and email security.

Therefore, Goldman listed the following three key factors for the security group:

• The brokerage is negative on fundamentals of Check Point, pointing out Palo Alto's share gain and product revenue reset.
• Companies operating with subscription models are seen as more resistant, like Proofpoint and Symantec.
• There's been a weak macro and digestion period of customers after purchases in 2015.

The brokerage summed up in a note, "Based on the GS IT Survey, customers are also consolidating down the number of security vendors they use. This should benefit share gainers and platforms (PANW, FTNT, SYMC) long term, but is also driving longer sales cycles. While visibility is limited, we see the potential for improved spending in 2017 based on historical buying patterns/refresh cycles."

The above stock's status at close of Wednesday:

• Barracuda closed at $25.47, gaining $2.14, or 9.17 percent.
• Check Point added $0.14, or 0.18 percent, to finish at $76.77.
• Fortinet lost $3.43, or 10.06 percent, to finish at $20.66.
• Palo Alto closed at $154.22 losing $1.26, or 0.81 percent.
• Proofpoint closed at $69.52 shedding $1.50, or 2.11 percent.
• Symantec ended at $24.012 losing $0.12, or 0.48 percent.

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