As cyber threats grow, cybersecurity has transformed from a niche tech industry to a critical component of modern digital infrastructure. Fortinet (FTNT) isn’t the most visible player in this space, but it’s quietly emerging as one of the most consistent, innovative, and resilient cybersecurity companies. 

Fortinet stock has risen nearly 70% in the last year and shows no signs of slowing. The company recently reported another stellar quarter, boosting the stock by 10% year-to-date. Should you buy this AI stock before it goes any higher?

About Fortinet

Founded in 2000, Fortinet is best known for its FortiGate hardware firewalls. However, Fortinet’s product ecosystem goes far beyond that, with network security, endpoint protection, SD-WAN, Secure Access Service Edge (SASE), and cloud security offerings, making it a full-stack security vendor. Its security fabric platform combines artificial intelligence (AI), machine learning (ML), and automation to deliver real-time, scalable threat protection.

Cybersecurity’s Quiet Giant With a Bold Future

Unlike many competitors, which rely heavily on software subscriptions, Fortinet combines hardware offerings (its FortiGate firewalls) with high-margin software services. This has resulted in tremendous revenue growth over the last few quarters. In the most recent first quarter, total revenue rose 14% year-on-year to $1.54 billion. Product revenue rose 12.3% year over year, while service revenue increased 14.4%. Total billings were $1.6 billion, an increase of 13.5%. Remaining performance obligations, which refer to unrealized revenue, came in at $6.49 billion. The company expects to realize $3.38 billion of that as revenue over the next 12 months.

Adjusted net income increased 35% to $0.58 per share. Unlike many of its unprofitable software-as-a-service peers, Fortinet has maintained profitable growth and strong cash flows, distinguishing itself from its competitors. The company generated $782.8 million in free cash flow during the quarter. 

While it does not currently pay dividends, a large free cash flow balance may allow it to return to shareholders in the near future. The company invests heavily in R&D, spending over $700 million in 2024 to remain at the forefront of cybersecurity.

Looking ahead, management expects second-quarter revenue to be between $1.59 billion and $1.65 billion, up 11% to 15%. Earnings are also expected to be between $0.58 and $0.60 per share, compared to $0.57 per share. Analysts expect revenue of $1.63 billion and earnings of $0.59 per share in the second quarter. Analysts predict 13.5% revenue growth and a 5% increase in earnings for the full year. At 37 times projected earnings, Fortinet appears to be overvalued. However, it reflects investors’ confidence in the company's long-term prospects.

Is FTNT Stock a Buy, Hold or Sell on Wall Street?

Following Fortinet’s Q1 performance, TD Cowen analyst Shaul Eyal reiterated the stock’s “Buy” rating and set a price target of $135. Eyal believes the company will continue to thrive in key areas such as SD-WAN and SASE, bolstering its position as a network security leader. A strong pipeline, high closure rates, and resilient fundamentals support Eyal’s bullish outlook for the stock.

Similarly, Morgan Stanley analyst Keith Weiss maintained a “Buy” rating for Fortinet, citing long-term growth potential despite recent headwinds. Weiss believes that while Q1 product revenue lagged behind peers and subscription revenue declined, Fortinet outperformed on overall billings and operating margins, indicating a resilient business model. Weiss set a price target of $105 for FTNT.

Overall, on Wall Street, FTNT is a “Moderate Buy.” Of the 41 analysts covering the stock, 13 rate it a “Strong Buy,” 26 rate it a “Hold,” and two suggest a “Strong Sell.”  Based on its mean target price of $108.00, the stock has an upside potential of 3.8% from current levels. Plus, the Street-high target price of $135 suggests a potential price increase of 29.3% over the next 12 months. 

The Verdict

For growth-oriented investors, Fortinet is an appealing option because it is profitable, well-managed, and financially secure. Furthermore, it combines hardware strength with increased software and service revenue. While there are risks associated with competition in the cybersecurity space, Fortinet has the ingredients to weather volatility and emerge stronger for long-term investors.