Fortinet stock price target cut to $94 by Bernstein analysts

On Thursday, Bernstein analysts revised their outlook on Fortinet (NASDAQ:FTNT), a global leader in broad, integrated, and automated cybersecurity solutions, by reducing the company’s price target from $111.00 to $94.00. Despite this adjustment, the firm maintained a Market Perform rating on the stock. According to InvestingPro data, Fortinet’s stock has shown remarkable strength with a 79% return over the past year, while maintaining impressive gross profit margins of 81%.

The change comes after Fortinet’s first-quarter earnings for 2025 aligned with consensus expectations. This outcome may seem underwhelming compared to the company’s performance in 2024, where it consistently exceeded expectations. Specifically, Fortinet’s earnings beat ranged from 1-2% in the first three quarters to a 4% beat in the fourth quarter of 2024. The fourth quarter was notably strong, and while such a margin may not be sustainable, signs of softness in the recent quarter have made it challenging for management to project confidence. InvestingPro analysis reveals the company maintains strong fundamentals with a return on assets of 20.5% and an overall Financial Health score of "GREAT", suggesting resilient operational efficiency despite market challenges.

Bernstein analysts pointed out that Fortinet’s significant presence in the small and medium-sized business (SMB) and branch office sectors could be more vulnerable to economic contractions than other vendors that primarily serve corporate data centers. In the event of a recession, a trend toward enterprise cyber consolidation and platformization could offer a tailwind to some companies, but Fortinet might not be ideally positioned to fully capitalize on this opportunity. For deeper insights into Fortinet’s market position and growth potential, InvestingPro subscribers can access 15 additional ProTips and a comprehensive Pro Research Report, which provides detailed analysis of the company’s competitive advantages and growth drivers.

In their analysis, Bernstein factored in added conservatism regarding Fortinet’s software business while maintaining expectations for the hardware refresh cycle. They employed a 50/50 weighted Discounted Cash Flow (DCF) model with a 10% Weighted Average Cost of Capital (WACC), a decrease from the previous 11%, and a 3% terminal growth rate. Additionally, they applied a 10 times Price/Next Twelve Months (NTM) sales multiple, a reduction from approximately 12 times, based on their rule-of-40 regression. These considerations led to the lowered price target of $94 while reiterating the Market Perform rating. Current market data shows Fortinet trading at a P/E ratio of 47x, with revenue growth of 12.3% in the last twelve months.

In other recent news, Fortinet reported its first-quarter earnings for 2025, surpassing analysts’ expectations with an earnings per share (EPS) of $0.58, compared to the forecast of $0.53. Revenue for the quarter grew by 14% year-over-year, reaching $1.54 billion, with product revenue rising by 12% and service revenue also increasing by 14%. Despite the strong financial performance, Fortinet’s stock experienced a significant drop in aftermarket trading. Jefferies analyst Joseph Gallo revised Fortinet’s stock price target to $100 from $105, maintaining a Hold rating, following the company’s modestly better-than-expected billings. Evercore ISI maintained its In Line rating for Fortinet with a $105 price target, noting a mixed earnings report due to a dip in services revenue but stronger product sales. Piper Sandler reiterated an Overweight rating on Fortinet, highlighting positive aspects of the company’s recent performance and a prudent future guidance. Fortinet’s management expressed confidence in a stronger second half, driven by hardware upgrades and demand for next-generation products, despite maintaining a cautious outlook for the second quarter.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.