Fortinet Targets 45% Growth-Margin Combo, $450 Million Refresh Boost: Analysts See Big Upside

In This Article:

Fortinet Targets 45% Growth-Margin Combo, $450 Million Refresh Boost: Analysts See Big Upside
Fortinet Targets 45% Growth-Margin Combo, $450 Million Refresh Boost: Analysts See Big Upside

On November 7, Fortinet reported third-quarter revenue of $1.51 billion, up 13%, topping the consensus estimate of $1.48 billion. Product revenue was up 1.7% to $473.9 million. Service revenue grew 19.1% to $1.03 billion. Billings of $1.58 billion were up 6.1%.

The company expects fourth-quarter revenue of $1.56 billion-$1.62 billion versus a consensus of $1.59 billion.

Also Read: Vipshop Beats Q3 Estimates Despite Sales Dip, Focuses On Long-Term Resilience

Several Wall Street analysts rerated Fortinet, Inc (NASDAQ:FTNT) after attending the 2024 analyst day.

  • Cantor Fitzgerald analyst Jonathan Ruykhaver reiterated Fortinet with a Neutral and raised the price target from $88 to $95.

  • RBC Capital analyst Dan Bergstrom maintained Fortinet with a Sector Perform and raised the price target from $82 to $97.

  • BMO Capital analyst Keith Bachman raised the price target on Fortinet to $100 from $88 and reiterated a Market Perform rating on the shares.

  • BofA Securities analyst Tal Liani raised the price target on Fortinet to $104 from $87 and maintained a Buy rating on the shares.

  • Piper Sandler analyst Rob Owens reiterated a Hold rating on Fortinet and set a price target of $100, up from $80.

  • Goldman Sachs analyst Gabriela Borges maintained a Buy rating on Fortinet with a price target of $100, up from $91.

Cantor Fitzgerald: Ruykhaver maintained a neutral rating for Fortinet following its well-attended analyst day in New York, highlighting significant updates to long-term financial targets, product refresh insights, and robust growth strategies. The price target boost reflects an improved demand outlook and execution strength.

Fortinet expects approximately 25% of its installed base, representing 650,000 devices, to reach end-of-support in 2026. Customers will likely begin device upgrades in the first half of 2025, contributing an estimated $400 million–$450 million in additional product revenue.

This refresh could boost overall revenue by 4%–5%. Further upside may stem from Fortinet’s strategy of transitioning customers away from competitor contracts and additional cycles projected for 2027, with 350,000 more devices reaching end-of-support.

The company introduced its new “Rule of 45” target, combining revenue growth and operating margins to exceed 45%. Fortinet outlined goals of a 12% compound annual revenue growth rate (CAGR) and operating margins above 30%. Ruykhaver anticipates Fortinet surpassing this benchmark in fiscal 2025 and fiscal 2026, forecasting combined metrics of 46.3% and 48.2%, respectively, showcasing its commitment to long-term operational excellence.

Waiting for permission
Allow microphone access to enable voice search

Try again.