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On Monday, Baird adjusted its stance on Fortinet (NASDAQ:FTNT) shares, downgrading the cybersecurity firm from Outperform to Neutral, while simultaneously increasing the price target to $112 from the previous $105. The revision comes after a period of notable performance from Fortinet, which saw its shares surge approximately 61% in 2024, outpacing the iShares Expanded Tech-Software Sector ETF (IGV), which rose about 23% in the same timeframe. According to InvestingPro data, the stock is currently trading near its 52-week high of $102.87, with analyst targets ranging from $62 to $120.
Fortinet has continued to outperform the IGV year-to-date, posting a 7% gain compared to the IGV’s 3% increase. However, the company experienced a downturn in January, becoming one of the weakest performers among the stocks Baird covers. Despite this, expectations are set for Fortinet to see a reacceleration in its revenue growth to a low-teens percentage year-over-year, with an anticipated 130 basis points acceleration. With the company’s next earnings report due on February 6, InvestingPro analysis indicates impressive gross profit margins of 79.71% and a strong overall financial health score.
The firm’s analysts noted that while Fortinet’s calendar year 2025 revenue estimates have been revised approximately 4% lower since the beginning of 2024, the company is expected to maintain robust operating and free cash flow margins exceeding 30%. Baird anticipates that Fortinet will continue to enhance its growth through increased investments, whether organically or through additional mergers and acquisitions.
Baird’s position reflects a cautious approach, as the analysts await clearer indications of potential upside from a refresh cycle. This tactical caution is suggested despite the firm’s recognition of Fortinet’s strong performance and the adjustments made to revenue growth expectations and operating margins.
In other recent news, cybersecurity company Fortinet has seen a flurry of analyst activity. Rosenblatt Securities raised its Fortinet stock price target to $115, anticipating robust fourth-quarter 2024 earnings. TD Cowen also increased its price target for Fortinet shares to $120.00, citing strong demand trends for the company’s network security and cloud-related solutions. However, Raymond (NSE:RYMD) James downgraded Fortinet stock from Outperform to Market Perform, noting the company’s substantial growth and the increasing market anticipation of a ’supercycle’ in network security.
Piper Sandler upgraded their stance on Fortinet stock to Overweight and increased the price target from $100.00 to $120.00, due to Fortinet’s potential in the forthcoming firewall cycle. Baird maintained an Outperform rating on Fortinet, raising the stock’s price target to $105.00, based on the company’s robust growth margins and anticipated revenue acceleration. Lastly, KeyBanc Capital Markets upgraded Fortinet’s stock from Sector Weight to Overweight and set a new price target of $115.00, reflecting increased confidence in the company’s prospects.
These are recent developments in the company’s stock performance, with analysts predicting strong future earnings and revenue.
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