Fortinet (FTNT) Stock Forecast & Price Target

Fortinet experienced robust financial performance in its latest quarter, with total revenue increasing by 14% year-over-year to $1.72 billion, alongside total billings also growing by 14% year-over-year to $1.81 billion. The company showcased a strong rebound in Product Revenue, which rose by 18% year-over-year to $559 million, primarily driven by demand for its SASE, SecOps, and OT offerings, in addition to emerging segments like Secure AI Data Center. Furthermore, Fortinet achieved a record operating margin of 36.9%, reflecting effective scale improvements and disciplined expense management, which contributes to a positive outlook for its financial health moving forward.

Fortinet's stock is facing a negative outlook due to modest service revenue growth of only 13% year-over-year, which management has linked to subscription attach timing and higher-than-anticipated churn from Lacework. Despite a favorable hardware refresh cycle and attractive operating margins, the reliance on hardware sales may not offset the challenges arising from customer churn and subscription dynamics. Additionally, while the company's current valuation appears discounted, the underlying revenue growth concerns raise doubts about its long-term financial stability in a competitive cybersecurity market.