Balanced Product Strength vs. Service Slowdown Keeps Fortinet at Hold: Solid Long-Term Story but Limited Near-Term Upside

Robert W. Baird analyst Shrenik Kothari has reiterated their neutral stance on FTNT stock, giving a Hold rating on February 3.

Shrenik Kothari has given his Hold rating due to a combination of factors tied to Fortinet’s recent performance and outlook. He acknowledges that the company closed fiscal 2025 on a strong note, with product revenue, billings, and operating margin all surpassing market expectations, and he views the reiterated mid‑term growth and margin targets—supported by focus areas such as SASE, security operations, OT, and AI—as fundamentally sound. He also notes that Fortinet continues to invest in innovation, including the upcoming FortiOS 8.0 release, expanded AI‑driven security capabilities, and a strategic partnership with NVIDIA to help secure AI infrastructure, all of which support the long‑term story.

At the same time, Kothari emphasizes that key service revenue metrics are lagging, with guidance for this higher‑margin segment coming in below consensus and recurring growth indicators, such as SASE ARR, showing moderation. He points out that the recent product price increase is expected to have only a modest impact on the revenue trajectory and is not a major driver of the current outlook, limiting near‑term upside. While metrics like large‑deal growth and RPO expansion are encouraging, he believes the balance between solid product momentum and slower service revenue trends justifies a neutral stance until there is better visibility into a sustained acceleration in services and overall growth durability. As a result, he maintains a Hold rating, seeing a more balanced risk‑reward profile at current levels rather than a clear catalyst for a more aggressive recommendation.

According to TipRanks, Kothari is a 5-star analyst with an average return of 21.5% and a 65.45% success rate. Kothari covers the Technology sector, focusing on stocks such as CommVault Systems, Qualys, and Zscaler.

In another report released on February 3, Barclays also maintained a Hold rating on the stock with a $88.00 price target.