Shrenik Kothari, an analyst from Robert W. Baird, maintained the Hold rating on Fortinet (FTNT – Research Report). The associated price target remains the same with $115.00.
Shrenik Kothari has given his Hold rating due to a combination of factors influencing Fortinet’s financial performance and market position. The company’s revenue growth, particularly in service and security subscriptions, has been robust, showing a significant year-over-year increase. However, the anticipated decrease in service gross margins for the upcoming fiscal year, as Fortinet expands its data center and cloud hosting capacities, poses a concern for future profitability.
Additionally, while Fortinet’s customer base includes a substantial portion of Fortune 100 and G2K companies, the revenue contribution from recent acquisitions remains minimal. The geographic distribution of billings also suggests a reliance on a limited number of countries, which could impact growth stability. These elements collectively contribute to a cautious outlook, justifying the Hold rating as the company navigates these challenges and opportunities.