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Sunnyvale, California-based Fortinet, Inc. (FTNT) is a cybersecurity company that provides a broad range of security solutions, including next-generation firewalls, endpoint protection, intrusion prevention, and cloud security. Valued at a market cap of $64.5 billion, the company is known for its strong presence in network security and growing focus on cloud and software-based services.
This cybersecurity company has lagged behind the broader market over the past 52 weeks. Shares of Fortinet have gained 6.9% over this time frame, while the broader S&P 500 Index ($SPX) has soared 17.4%. Moreover, on a YTD basis, the stock is down 10.9%, compared to SPX’s 16% surge.
Narrowing the focus, Fortinet has also underperformed the Xtrackers Cybersecurity Select Equity ETF’s (PSWD) 12.4% uptick over the past 52 weeks and 9.7% YTD rise.
Despite posting a better-than-expected Q2 performance on Aug. 6, shares of Fortinet crashed 22% in the following trading session. The company’s total revenue improved 13.6% year-over-year to $1.6 billion, marginally surpassing consensus estimates. Furthermore, its net income surged 15.9% from the year-ago quarter to $440.1 million, while its cash flow from operations advanced 12.2% from the same period last year, reaching $1.3 billion.
However, Fortinet’s fiscal 2025 revenue guidance of $6.7 billion to $6.8 billion came in below Wall Street’s expectations, which hurt investor sentiment.
For the current fiscal year, ending in December, analysts expect FTNT’s EPS to grow 5.7% year over year to $2.21. The company’s earnings surprise history is promising. It exceeded the consensus estimates in each of the last four quarters.
Among the 42 analysts covering the stock, the consensus rating is a "Hold,” which is based on nine “Strong Buy,” 30 “Hold,” one "Moderate Sell,” and two “Strong Sell” ratings.
This configuration is considerably less bullish than three months ago, with 14 analysts suggesting a “Strong Buy” rating and none recommending "Moderate Sell.”
On Oct. 22, Jonathan Ruykhaver from Cantor Fitzgerald maintained a "Hold" rating on FTNT, with a price target of $87, implying a 3.3% potential upside from the current levels.
The mean price target of $88.41 represents a 5% premium from Fortinet’s current price levels, while the Street-high price target of $120 suggests an ambitious upside potential of 42.5%.
