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Investing.com - Erste Group downgraded Fortinet (NASDAQ:FTNT) from Buy to Hold on Thursday, citing concerns about the cybersecurity company’s operating margins and future growth prospects. According to InvestingPro data, the stock currently trades at $79.33, with 31 analysts recently revising their earnings expectations upward for the upcoming period.
The research firm noted that Fortinet’s revenue for the current year is expected to range between $6.7 billion and $6.8 billion, with the company recently revising its service revenue forecast slightly downward.
Erste Group pointed out that Fortinet’s operating margin will amount to approximately 32% to 33.5%, which falls below that of its peer group in the cybersecurity sector.
The downgrade reflects Erste Group’s assessment that this margin underperformance is not expected to change in the next two years, creating a sustained competitive disadvantage for Fortinet .
Sales growth in the coming year is also projected to be lower than the current year’s growth rate, further contributing to the more cautious outlook on the stock.
In other recent news, Fortinet reported strong second-quarter 2025 results, with product revenue, billings, and operating margins surpassing FactSet estimates. Despite these achievements, the company faced slower subscription revenue growth, which led Cantor Fitzgerald to lower its price target to $87, maintaining a Neutral rating. Similarly, Roth/MKM adjusted its price target to $90, citing mixed earnings where service revenues and cash flow missed analyst targets. Rosenblatt also downgraded Fortinet from Buy to Neutral, setting a new price target of $85 due to concerns over a firewall refresh. TD Cowen followed suit, downgrading the stock to Hold and reducing the price target to $105, expressing uncertainty about future appliance growth after the current refresh cycle. Stifel lowered its price target to $85 while maintaining a Hold rating, noting that Fortinet’s billings grew 15.4% year-over-year and revenue increased 13.6% year-over-year. These recent developments reflect a cautious outlook among analysts, despite Fortinet’s raised full-year 2025 revenue, billings, and profit guidance.
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