Raymond James reiterates Market Perform rating on Fortinet stock

Investing.com - Raymond (NSE:RYMD) James maintained its Market Perform rating on Fortinet (NASDAQ:FTNT) following the company’s second-quarter results. According to InvestingPro data, the cybersecurity company maintains impressive gross profit margins of 81% and has demonstrated strong revenue growth of ~14% over the last twelve months.

The cybersecurity firm reported billings above analyst expectations, but Raymond James noted that qualitative commentary dampened enthusiasm for a potential "supercycle" bull case.

The research firm expressed hesitation about recommending the stock despite a sharp indicated decline, citing concerning data points outside the firewall refresh that is driving current results.

Raymond James highlighted that Secure Access Service Edge (SASE), a key incremental market beyond firewall, showed lackluster performance based on their checks, with Net New Annual Recurring Revenue (NNARR) essentially at zero for the quarter.

The firm expects Fortinet’s valuation multiple to compress toward the lower end of double-digit growth comparables as billings hover at mid-teens growth during the peak refresh period, potentially creating a glide path approaching single-digit growth without a second act of growth.

In other recent news, Fortinet reported its second-quarter earnings for 2025, exceeding expectations with an earnings per share (EPS) of $0.64 compared to the forecasted $0.59. The company also met revenue forecasts, bringing in $1.63 billion. Despite these positive earnings results, Fortinet’s stock experienced a significant drop in premarket trading, indicating investor concerns about future growth prospects. Additionally, several analyst firms have downgraded Fortinet’s stock. Morgan Stanley (NYSE:MS) downgraded the company from Overweight to Equalweight, citing a "meaningful reset of expectations" for the firewall refresh cycle. Piper Sandler also downgraded the stock to Neutral due to concerns about Fortinet’s 2026 renewal cohort. KeyBanc followed suit, downgrading Fortinet to Sector Weight, expressing worries about the product refresh cycle and revenue growth. These developments reflect a cautious outlook among analysts regarding Fortinet’s future performance.

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