On Thursday, Stifel analysts adjusted their outlook for Fortinet (NASDAQ:FTNT), reducing the cybersecurity firm’s price target from $115.00 to $95.00 while maintaining a Hold rating on the stock. The adjustment followed Fortinet’s first-quarter financial report for 2025, which showed a robust performance with billings, revenue, product revenue, margins, earnings per share (EPS), and cash flow from operations/free cash flow (CFFO/FCF) surpassing Stifel and Wall Street estimates or meeting the midpoint of the company’s guidance. According to InvestingPro data, Fortinet maintains impressive gross profit margins of 80.56% and has achieved a 12.27% revenue growth over the last twelve months, demonstrating strong operational efficiency.
Fortinet has reported continued strength across its product portfolio, noting early success with its secure access service edge (SASE) and security operations (SecOps) offerings, alongside solid hardware growth. This performance comes despite an easy comparison to previous periods. The company’s guidance for the second quarter of 2025 is in line with consensus expectations, and Fortinet has reaffirmed its full-year revenue forecast, with a slight increase in operating margin. InvestingPro analysis suggests the company is slightly undervalued at current levels, with analysts maintaining price targets ranging from $83 to $135.
However, despite these positive indicators, Fortinet’s stock experienced a significant drop of over 12% in after-hours trading. Analysts attribute this decline to expectations that were higher than the solid results delivered. Moreover, several factors contributed to a cautious reception from investors, including a lack of macroeconomic impact, sales-force uncertainty, a sequential decline in services revenue for the first time since the first quarter of 2022, higher-than-expected customer churn following the Lacework acquisition, and relative softness in the small and medium-sized business (SMB) segment.
The report also anticipates that the results from Fortinet will have a negative influence on the performance of Palo Alto (NASDAQ:PANW), another player in the cybersecurity space, in the current trading session.
In other recent news, Fortinet’s first-quarter 2025 earnings report has sparked varied reactions from analysts and investors. The company reported strong product sales, exceeding analyst projections, though subscription revenue growth lagged behind expectations. Fortinet reaffirmed its full-year revenue guidance, attributing cautious billing forecasts to macroeconomic concerns. Cantor Fitzgerald maintained a Neutral rating with a $100 price target, reflecting a balance between robust product sales and slower subscription growth. Truist Securities, however, upheld a Buy rating with a $125 target, noting significant billing growth in areas like SASE and SecOps. Bernstein analysts cut their price target to $94, citing vulnerability in Fortinet’s SMB sector amidst economic contractions. Piper Sandler reiterated an Overweight rating and a $135 target, emphasizing strong enterprise demand and potential for continued growth. Lastly, Jefferies adjusted its price target to $100, maintaining a Hold rating due to uncertainties in service revenue growth and customer demand. These developments highlight the mixed views on Fortinet’s financial outlook and strategic positioning.
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