Fortinet’s Price Target Cut at Barclays

Barclays analysts adjusted their price target for Fortinet (NASDAQ:FTNT), lowering it to $70 from $75 while maintaining an Equalweight rating.

The analysts outlined three main points ahead of Fortinet's Q2 earnings report. First, they expect the company's Q2 billings to align with its guidance of an approximate 1% year-over-year decline, facing a tough comparison due to an estimated $50 million backlog benefit in Q2/23. When adjusted for this, the implied bookings growth is around 2% year-over-year, with mixed insights from checks.

Second, the analysts anticipate that Fortinet will maintain its full 2024-year billings guidance organically, potentially incorporating contributions from the recent Lacework acquisition. They project a 10% year-over-year growth in bookings for the second half of 2024, which aligns with his forecast of an 11% growth in fiscal 2025 billings. Notably, their estimates for 2025 billings and revenue are below the consensus.

Third, with Fortinet offering SASE for free with FortiAP this quarter, the analysts are interested in how billings will be divided between Secure Networking and SASE and what impact this could have on renewals. They also noted headlines about some vulnerabilities during the quarter but mentioned that their checks did not indicate a significant impact.