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Investing.com - Piper Sandler downgraded Fortinet (NASDAQ:FTNT) from Overweight to Neutral on Thursday, slashing its price target to $90.00 from $135.00. The cybersecurity company, currently trading at a P/E ratio of 39.4x and commanding a market cap of $74 billion, has demonstrated impressive gross profit margins of 81.3%.
The research firm cited concerns about Fortinet’s disclosure that it has already processed 40-50% of its 2026 renewal cohort, which Piper Sandler believes could undermine investor confidence in the cybersecurity company’s growth trajectory.
Piper Sandler characterized the situation as a "multi-quarter, show-me situation," noting that product comparisons will become more challenging in upcoming quarters, further complicating Fortinet’s outlook.
The downgrade comes despite Fortinet’s recent quarterly results, which Piper Sandler acknowledged appeared to be "a step in the right direction" amid expectations of a refresh cycle benefiting the second half of 2025.
While Piper Sandler indicated Fortinet shares could represent good value if the company achieves its previously outlined 12% compound annual growth rate over the next 3-5 years, the firm stated it is "difficult to endorse this proposition for now."
In other recent news, Fortinet reported its second-quarter earnings for 2025, surpassing analyst expectations with an earnings per share (EPS) of $0.64 compared to the forecast of $0.59. The company also met revenue forecasts, achieving $1.63 billion for the quarter. Despite these results, there are concerns among investors about Fortinet’s future growth prospects. KeyBanc recently downgraded Fortinet from Overweight to Sector Weight, citing issues related to the company’s product refresh cycle and underlying revenue growth. According to KeyBanc, Fortinet has already completed 40-50% of the 2026 end-of-service refresh cohort and has lowered expectations for the 2027 refresh cohort. These developments have contributed to a cautious outlook among analysts and investors.
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