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Fortinet (FTNT)
NASDAQ:FTNT

Fortinet (FTNT) AI Stock Analysis

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Fortinet

(NASDAQ:FTNT)

Rating:79Outperform
Price Target:
$118.00
▲(15.20%Upside)
Fortinet's strong financial performance and optimistic earnings guidance are the key drivers of the stock's score. However, high valuation metrics and mixed technical indicators temper the overall score. Notable challenges include macroeconomic uncertainties and potential tariff impacts.
Positive Factors
Billings Growth
FTNT posted its strongest billings performance in the past seven quarters.
Customer Base
FTNT has approximately 77% of the Fortune 100 companies and 71% of the Global 2000 companies as customers.
Market Position
FTNT remains a clear network security platform leader.
Negative Factors
Dependency Risk
One distributor accounted for 27% of FTNT's total revenue in Q1, indicating a potential risk due to high dependency on a single distributor.
Product Revenue
Product revenue growth decelerates to 12.3%.
Revenue Guidance
Revenue guidance for the second quarter was below consensus despite mounting expectations for Fortinet’s firewall refresh cycle to materialize.

Fortinet (FTNT) vs. SPDR S&P 500 ETF (SPY)

Fortinet Business Overview & Revenue Model

Company DescriptionFortinet, Inc. is a global leader in broad, integrated, and automated cybersecurity solutions. The company, headquartered in Sunnyvale, California, offers a wide range of products and services that cater to enterprises, service providers, and government organizations. Fortinet's core offerings include network security solutions, endpoint security, application security, and secure access products, all designed to protect data and systems from cyber threats. Fortinet's flagship product, the FortiGate firewall, is renowned for its ability to deliver high-performance security across both on-premises and cloud environments.
How the Company Makes MoneyFortinet primarily generates revenue through the sale of its cybersecurity products and services. The company's revenue model includes product sales, which comprise physical and virtual appliances, and security subscription services that offer continuous threat updates, advanced security features, and technical support. Fortinet also earns from professional services, including consulting and training. Significant partnerships with technology providers, resellers, and managed security service providers (MSSPs) extend Fortinet's market reach, contributing to its revenue growth. Additionally, the company benefits from the increasing demand for cybersecurity solutions driven by the rising frequency and sophistication of cyber-attacks, as well as the global shift towards digital transformation.

Fortinet Key Performance Indicators (KPIs)

Any
Any
Billings
Billings
Reflects the total value of invoices sent to customers, indicating sales momentum and future revenue potential for Fortinet.
Chart InsightsFortinet's billings have shown a steady upward trend, with notable growth in Q4 2024. Despite macroeconomic uncertainties and potential tariff impacts, the company remains resilient, driven by strong innovation and customer acquisition efforts. The latest earnings call highlights robust growth in Unified SASE and AI-driven secure operations, which are key contributors to billings. Fortinet's guidance for 2025 suggests continued momentum, with expected billings growth and strategic infrastructure investments, reinforcing its market leadership and commitment to achieving the rule of 45 for the sixth consecutive year.
Data provided by:Main Street Data

Fortinet Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q1-2025)
|
% Change Since: -4.02%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Neutral
Fortinet reported strong growth and maintained leadership in key market segments. However, macroeconomic uncertainties and potential tariff impacts present challenges. Despite these concerns, the company's innovation and customer acquisition efforts remain strong.
Q1-2025 Updates
Positive Updates
Strong Revenue and Growth
Fortinet reported a revenue growth of 14% and a record first quarter operating margin of 34%. Free cash flow was also a record at $783 million, representing a margin of 51%.
Unified SASE and Secure Operations Growth
Unified SASE billings grew by 18% and account for 25% of the business, while AI-driven secure operations billings increased by 29%, accounting for 10% of the business.
Market Leadership in Multiple Segments
Fortinet maintained its position as the number one deployed firewall vendor worldwide and a leader in SD-WAN and OT security.
New Customer Acquisition
The company saw a 14% increase in new logos, with over 6,300 new customers, driven by channel partner investments.
Innovative Product Launch
Fortinet announced the FortiGate 700G series, a high-performance firewall for mid-size businesses and distributed enterprises.
Negative Updates
Macroeconomic Uncertainty
The company noted hesitancy in sales due to broader economic outlook and geopolitical uncertainties, which could impact top-line results.
Tariff Concerns
Potential future U.S. tariffs could impact hardware sales to U.S. customers, although no immediate effect is expected.
Sequential Decline in Service Revenue
Service revenue saw a slight sequential decline attributed to fewer days in the first fiscal quarter.
FX Headwinds
The weakening U.S. dollar is expected to create an operating margin headwind of approximately 120 basis points in Q2.
Company Guidance
During the call, Fortinet provided guidance for the second quarter and full year of 2025. For the second quarter, the company expects billings between $1.685 billion and $1.765 billion, with a midpoint growth of 12%, and revenue between $1.59 billion and $1.65 billion, reflecting a midpoint growth of 13%. Non-GAAP gross margins are projected to be between 80% and 81%, with non-GAAP operating margins ranging from 31.5% to 32.5%. Earnings per share are anticipated to be between $0.58 and $0.60. For the full year, Fortinet expects billings to range from $7.2 billion to $7.4 billion, with revenue between $6.65 billion and $6.85 billion. The full-year guidance includes non-GAAP gross margins of 79% to 81% and non-GAAP operating margins of 31.5% to 33.5%. The company projects earnings per share to be between $2.43 and $2.49. Additionally, Fortinet plans infrastructure investments between $380 million and $430 million for the year, maintaining a non-GAAP tax rate of 18%. Despite challenges, Fortinet remains optimistic about achieving the rule of 45 for the sixth consecutive year.

Fortinet Financial Statement Overview

Summary
Fortinet exhibits strong financial performance with high gross and net profit margins, robust revenue growth, and efficient cash flow generation. The balance sheet shows improvement with positive equity, although a high debt-to-equity ratio remains a concern.
Income Statement
92
Very Positive
Fortinet demonstrates strong financial performance with high gross profit margins at 80.57% and significant net profit margins at 29.30% for TTM. Revenue growth rate of 12.27% from the previous year is robust, contributing to overall profitability. EBIT and EBITDA margins are also strong at 30.24% and 34.40% respectively, indicating efficient operational management.
Balance Sheet
75
Positive
The balance sheet shows a high debt-to-equity ratio due to negative equity in previous years, though it has improved to a positive equity of $1.49 billion recently. Return on Equity (ROE) is not calculable due to negative equity in earlier periods, but positive current equity suggests improved financial health. The equity ratio is 15.30%, indicating limited equity financing relative to assets.
Cash Flow
88
Very Positive
Fortinet's cash flow is strong, with a free cash flow growth rate of 8.54% and a high operating cash flow to net income ratio of 1.29 for TTM, indicating solid cash generation. The free cash flow to net income ratio is 1.08, showing an efficient translation of net income into free cash flow.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue6.14B5.96B5.30B4.42B3.34B2.59B
Gross Profit5.00B4.80B4.07B3.33B2.56B2.02B
EBITDA2.34B1.80B1.47B1.08B727.70M560.40M
Net Income1.88B1.75B1.15B857.30M606.80M488.50M
Balance Sheet
Total Assets10.41B9.76B7.26B6.23B5.92B4.04B
Cash, Cash Equivalents and Short-Term Investments4.78B4.07B2.44B2.21B2.55B1.84B
Total Debt994.90M994.30M1.07B990.40M988.40M53.10M
Total Liabilities8.44B8.27B7.72B6.51B5.12B3.19B
Stockholders Equity1.96B1.49B-463.40M-281.60M781.70M856.00M
Cash Flow
Free Cash Flow2.07B1.88B1.73B1.45B1.20B957.80M
Operating Cash Flow2.29B2.26B1.94B1.73B1.50B1.08B
Investing Cash Flow-567.90M-727.40M-649.30M763.90M-1.33B-72.80M
Financing Cash Flow-19.80M-50.10M-1.57B-2.13B82.80M-1.17B

Fortinet Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price102.43
Price Trends
50DMA
102.80
Negative
100DMA
101.98
Positive
200DMA
95.76
Positive
Market Momentum
MACD
0.25
Negative
RSI
48.61
Neutral
STOCH
65.99
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FTNT, the sentiment is Neutral. The current price of 102.43 is below the 20-day moving average (MA) of 102.62, below the 50-day MA of 102.80, and above the 200-day MA of 95.76, indicating a neutral trend. The MACD of 0.25 indicates Negative momentum. The RSI at 48.61 is Neutral, neither overbought nor oversold. The STOCH value of 65.99 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for FTNT.

Fortinet Risk Analysis

Fortinet disclosed 59 risk factors in its most recent earnings report. Fortinet reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Fortinet Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$78.92B43.52205.91%13.83%58.13%
78
Outperform
$131.75B112.7221.16%13.91%-50.96%
78
Outperform
$23.96B28.9730.92%6.40%6.49%
74
Outperform
$122.65B721.64-5.76%25.94%-226.80%
73
Outperform
$19.70B1,777.39-5.36%35.12%-191.84%
ZSZS
72
Outperform
$47.85B-2.68%25.46%49.20%
63
Neutral
$33.22B5.73-11.55%1.90%5.54%-20.14%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
FTNT
Fortinet
102.21
41.48
68.30%
CHKP
Check Point
219.39
50.67
30.03%
PANW
Palo Alto Networks
196.97
26.37
15.46%
CYBR
CyberArk Software
387.92
116.84
43.10%
ZS
Zscaler
309.33
110.93
55.91%
CRWD
CrowdStrike Holdings
496.10
108.92
28.13%

Fortinet Corporate Events

Executive/Board ChangesShareholder Meetings
Fortinet Elects Board and Retains Deloitte as Auditor
Neutral
Jun 18, 2025

At the Annual Meeting of Stockholders held on June 13, 2025, Fortinet, Inc. successfully elected nine directors to its Board for a one-year term, ratified Deloitte & Touche LLP as its independent accounting firm, and held an advisory vote on executive compensation. However, a stockholder proposal to separate the roles of Chairman and CEO was not approved. These decisions reflect Fortinet’s current governance structure and strategic direction, impacting its leadership and operational oversight.

The most recent analyst rating on (FTNT) stock is a Hold with a $82.00 price target. To see the full list of analyst forecasts on Fortinet stock, see the FTNT Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 24, 2025