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Investing.com - TD Cowen downgraded Fortinet (NASDAQ:FTNT), the $74 billion cybersecurity giant, from Buy to Hold on Thursday, while lowering its price target to $105 from $135. According to InvestingPro data, the stock currently trades at $96.58, with analyst targets ranging from $75 to $135.
The downgrade comes as TD Cowen analyst Shaul Eyal expressed concerns about uncertainty in core appliance growth once the current refresh cycle completes in the next 4-6 quarters. Despite these concerns, Fortinet maintains impressive gross profit margins of 81.3% and has demonstrated solid revenue growth of 14.5% over the last twelve months.
The firm noted that while Fortinet raised its second-half 2025 billings guidance by one percentage point to 15% year-over-year, the current refresh cycle has only reached 50% attainment.
TD Cowen also highlighted that Secure Access Service Edge (SASE) revenues could negatively impact sales of core firewall appliances in the long term.
The investment firm expects Fortinet shares to remain range-bound in the second half of 2025 until non-firewall growth accelerates.
In other recent news, Fortinet reported second-quarter earnings that exceeded expectations, with billings growing 15.4% year-over-year and revenue increasing 13.6% year-over-year. Product revenue rose by 12.6% compared to the same period last year, with margins and earnings per share surpassing both Stifel and consensus estimates. Despite these positive results, several firms have adjusted their price targets for Fortinet. Stifel lowered its target to $85 while maintaining a Hold rating, citing concerns over the company’s EOS refresh. UBS also reduced its target to $90, maintaining a Neutral rating, due to a revised growth outlook. Evercore ISI cut its target to $78, highlighting a significant shift in Fortinet’s business outlook regarding its firewall refresh cycle. Jefferies decreased its target to $85, maintaining a Hold rating, due to growth concerns. Meanwhile, Raymond (NSE:RYMD) James reiterated a Market Perform rating, noting that while billings exceeded expectations, commentary around the potential "supercycle" was less optimistic.
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