Cybersecurity Firm Fortinet Takes 'Step In Right Direction': 7 Analysts Deep Dive Into Q4 Print

Shares of Fortinet Inc FTNT climbed in premarket trading on Wednesday, after the cybersecurity company reported better-than-expected fourth-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.

• Piper Sandler analyst Rob Owens maintained a Neutral rating, while lifting the price target from $60 to $75.
• Truist Securities analyst Junaid Siddiqui reiterated a Buy rating, while raising the price target from $60 to $80.
• Mizuho Securities analyst Michael Romanelli reaffirmed a Neutral rating, while lifting the price target from $60 to $70.
• Stifel analyst Adam Borg maintained a Hold rating, while raising the price target from $52 to $78.
• Wedbush analyst Daniel Ives reiterated an Outperform rating, while lifting the price target from $75 to $86.
• Baird analyst Shrenik Kothari reiterated an Outperform rating and price target of $81.
• KeyBanc Capital Markets analyst Eric Heath reaffirmed a Sector Weight rating on the stock.

Check out other analyst stock ratings.

Piper Sandler: “Following two quarters of resets, 4Q results provided a sense of stabilization to the narrative, with billings showing strong outperformance on large deal trends / execution, helping the 2024 billings guide come in modestly ahead of expectations,” Owens wrote in a note.

While Fortinet’s secure networking business could continue facing headwinds in the back half of the year, due to backlogs, momentum seems to be building in the SecOps / SASE businesses, he added.

Truist Securities: Fortinet reported solid results for the fourth quarter, with higher-than-expected revenues, billings and margins, Siddiqui said. The upside in billings was driven by “improved sales execution and early returns on its pivot to SASE and SecOps,” he added.

“We continue to favor FTNT's balanced approach to growth and profitability making FTNT a defensible name long-term, in our view,” the analyst further stated.

Mizuho Securities: Fortinet’s total billings grew 8-9% year-over-year in the fourth quarter, significantly outperforming expectations of a 5% decline, Romanelli said. He added, however, that the decline in product revenues was much steeper than expected.

“We find the increased traction for SecOps and SASE encouraging,” the analyst wrote. “Still, the competition in these areas is tough, and we're skeptical whether this will truly move the needle for FTNT anytime soon,” he further stated.

Stifel: “We are encouraged by large deals (6, 8-figure deals that were conservatively not contemplated in guidance) along with early traction with SASE/SecOps (SASE billings +19% Y/Y; SecOps billings +44% Y/Y),” Borg wrote in a note.

“Net/net, we are pleased to see early signs of Fortinet righting the ship as firewall digestion, sales execution, product pivoting, and direct and channel GTM changes continue to play out,” he added.

Wedbush: Fortinet guided to billings growth of 1.6% at midpoint for 2024, slightly above the consensus estimates, Ives said.

“Overall, this quarter was a major step in the right direction," he added.

Baird: Fortinet’s 2024 guidance factors in an adverse impact of $100 million in billings, mainly due to backlog contribution, “which was substantial in 2023 ($150M to $200M) but is not expected to have the same impact in 2024,” Kothari wrote in a note.

“Additionally, FTNT anticipates a challenging start to the year in terms of product revenue, projecting a decrease of approximately 20% year-over-year in the first quarter of 2024,” he added.

KeyBanc: Although Fortinet delivered a solid beat on billings and earnings, its total revenues came in-line with expectations, while product revenues disappointed, Heath said.

“1Q revenue and billings were guided below, driven by a ~$60M guide below on product revenue, while margins were guided above,” the analyst wrote. “2024 revenue was guided below by ~$130M, primarily driven by product, while billings and margins were guided above,” he added.

FTNT Price Action: Shares of Fortinet had risen by 9.59% to $73.95 in the premarket session on Wednesday.