On Thursday, Rosenblatt Securities increased its price target for Fortinet stock (NASDAQ:FTNT) to $115 from the previous $100, while maintaining a "Buy" rating. Currently trading at $98.24 and near its 52-week high of $101, the stock has delivered an impressive 52.52% return over the past year. The firm anticipates robust fourth-quarter 2024 earnings for the cybersecurity company, which are to be announced after the market closes on February 6th. Analysts at Rosenblatt predict a potential upside to the current estimates, fueled by a year-end budget surge in December. According to InvestingPro, Fortinet maintains a "GREAT" overall financial health score.
The optimism is supported by feedback from five channel partners, who expressed a positive outlook for Fortinet’s CY25 budgets. This marks a notable improvement compared to the previous two years. According to the research, Fortinet’s value proposition has been particularly effective, with four out of five Value-Added Resellers (VARs) surpassing their sales targets and the fifth meeting expectations. InvestingPro data reveals an impressive gross profit margin of 79.71%, underlining the company’s operational efficiency. Subscribers can access 15+ additional ProTips and comprehensive financial metrics through the Pro Research Report.
The channel partners also highlighted growth prospects for FY25, driven by the End of Service for some of Fortinet’s E-series products, which is expected to initiate a strong product refresh cycle over the next 18 months. Fortinet’s competitive edge, underscored by cost efficiency and user-friendliness, is seen as a key factor in the company’s ability to increase its market share and drive revenue growth.
The revised price target of $115 is based on a 13x enterprise value to 2025 sales multiple, which is an increase from the previous 11x multiple and is now in line with the current average for Fortinet’s peers. The peer group average has seen an approximate 16% expansion year-to-date. Rosenblatt’s adjustment reflects the firm’s belief that the multiple expansion is warranted by Fortinet’s strong performance and a forecasted free cash flow (FCF) growth of 34%, outpacing the average of 25% among its peers. While trading above its InvestingPro Fair Value, the company’s strong financial metrics and market position continue to attract investor attention.
In other recent news, Fortinet’s stock has been the subject of numerous analyst adjustments. TD Cowen raised the price target for Fortinet shares to $120.00, citing strong demand trends for the company’s network security and cloud-related solutions. The firm’s fourth-quarter revenue estimate for Fortinet stands at $1.604 billion, a 13% year-over-year increase.
Raymond (NSE:RYMD) James, however, downgraded Fortinet stock from Outperform to Market Perform, given the company’s substantial growth and the increasing market anticipation of a ’supercycle’ in network security. The company’s billing growth has seen dramatic fluctuations, but stabilized and showed mid-single-digit growth in the third quarter of 2024.
Piper Sandler upgraded their stance on Fortinet stock to Overweight and increased the price target from $100.00 to $120.00, due to Fortinet’s potential in the forthcoming firewall cycle. Fortinet’s recent acquisitions and innovations have strategically placed the company in important markets, and the current valuation of Fortinet was considered an attractive entry point for investors.
Baird maintained an Outperform rating on Fortinet, raising the stock’s price target to $105.00, based on the company’s robust growth margins and anticipated revenue acceleration. Despite Fortinet’s elevated valuation, Baird believes that the company’s strategic emphasis on the rapidly expanding Secure Access Service Edge (SASE) and Security Operations (SecOps) markets positions it well for future growth.
Lastly, KeyBanc Capital Markets upgraded Fortinet’s stock from Sector Weight to Overweight and set a new price target of $115.00, reflecting increased confidence in the company’s prospects. They anticipate an industry-wide refresh opportunity in 2025 and believe the market has not adequately valued Fortinet’s own end-of-service refresh opportunity.
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