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Investing.com - Roth/MKM has lowered its price target on Fortinet (NASDAQ:FTNT) to $90 from $103 while maintaining a Neutral rating following the cybersecurity firm’s mixed quarterly results. InvestingPro analysis suggests the stock is currently undervalued, with analyst targets ranging from $75 to $135.
The company reported in-line revenues with billings and product revenues exceeding Street expectations, but service revenues and cash flow missed analyst targets. Roth/MKM noted that both overall revenue and product revenue fell short of buy-side expectations. Despite these mixed results, InvestingPro data shows Fortinet maintains impressive gross profit margins of 81.29% and achieved 14.46% revenue growth in the last twelve months.
Fortinet management indicated they have completed approximately 40%-50% of their EOS (End of Service) refresh cycle, providing insight into the progress of their product transition strategy.
For fiscal year 2025, Fortinet maintained its midpoint revenue guidance unchanged while raising its billings forecast by more than the amount of the current quarter’s beat. The company’s third-quarter 2025 revenue guidance came in below Street expectations, though its billings guidance was slightly ahead.
Roth/MKM analyst Taz Koujakgi maintained a Neutral stance on the stock while reducing the price target by $13, citing the mixed performance metrics and outlook.
In other recent news, Fortinet delivered second-quarter results that exceeded expectations, with billings growing 15.4% year-over-year and revenue increasing 13.6% year-over-year. Additionally, product revenue rose 12.6% compared to the same period last year, with margins and earnings per share surpassing both Stifel and consensus estimates. Despite these strong results, several analysts have expressed concerns regarding Fortinet’s future growth prospects. Rosenblatt downgraded Fortinet from Buy to Neutral, citing concerns about the firewall refresh cycle and adjusted their price target to $85. TD Cowen also downgraded the stock from Buy to Hold, lowering the price target to $105, due to uncertainty in core appliance growth. Stifel maintained a Hold rating but reduced the price target to $85, while UBS lowered its target to $90, maintaining a Neutral rating. Evercore ISI also adjusted its price target to $78, highlighting a significant shift in Fortinet’s business outlook concerning the firewall refresh cycle. These developments reflect a cautious sentiment among analysts despite Fortinet’s solid financial performance.
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