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Cloud Competition: Morgan Stanley Downgrades Fortinet, Raises Palo Alto Networks' Price Target
Public cloud stocks have underperformed the broader market in recent years, and the market is only pricing in 5-percent topline growth through the end of the decade, according to an industrywide Morgan Stanley report.
The sell-side firm’s analysts project topline growth of 9 percent in the sector, but said that not all companies will benefit equally from the growth over the coming years.
Morgan Stanley’s team of equity analysts led by Melissa Franchi downgraded Fortinet Inc (NASDAQ: FTNT) from Overweight to Equal-weight with an unchanged $53 price target. The firm maintains an Overweight rating on Palo Alto Networks Inc (NYSE: PANW) with a price target lifted from $205 to $224.
On average, security stocks have gained just 34 percent in value over the past three years while the broader software group generated an average return of 80 percent, Franchi said in a research report. (See the analyst’s track record here.)
A survey among chief information officers shows an acceleration in adoption of the public cloud to the point where 44 …
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