On Tuesday, TD Cowen analysts increased the price target for Fortinet (NASDAQ:FTNT) shares from $105.00 to $120.00 while maintaining a Buy rating.
The firm's analysts cited strong demand trends for the company's network security and cloud-related solutions as the basis for the adjustment. Their confidence is supported by positive feedback from Value-Added Resellers (VARs) and industry participants, indicating robust year-end closure rates and a solid pipeline heading into the first quarter of 2025.
The analyst's fourth-quarter revenue estimate for Fortinet stands at $1.604 billion, marking a 13% year-over-year increase, which is slightly above the Street's projection of $1.595 billion. Billing estimates for the same period are set at $1.986 billion, a 7% year-over-year rise and at the upper end of management's guidance. This optimistic outlook suggests potential for Fortinet's revenue to exceed the Street's high estimates, a development that would be received very positively by the market.
Fortinet's focus on cloud security, which is the fastest-growing segment within cybersecurity, has been validated by the channel's commentary and customer trials with Lacework. The company's emphasis on this area aligns with findings from recent research indicating a 26% year-over-year growth in cloud security. Moreover, network security, a key priority for the industry, has climbed in importance based on a 2025 cybersecurity survey, reflecting sustained investment in on-premises infrastructure.
Despite foreign exchange headwinds, particularly a 7.3% appreciation of the USD against the Euro in the fourth quarter, Fortinet's performance has remained stable. The company's significant exposure to the EMEA region has not dampened demand, and growth in the Americas and an improvement in the APAC region are anticipated to continue.
In conclusion, the raised price target to $120 is justified by Fortinet's robust growth prospects, with valuation multiples set at 12 times the enterprise value to FY26 estimated revenue and 35 times the enterprise value to FY26 estimated free cash flow. These multiples represent a premium compared to the group's average but are considered appropriate for Fortinet's long-term potential. Fortinet is scheduled to report its earnings after the market closes on February 6, 2025.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.