TD Cowen Analysts have upgraded their stance on Fortinet Inc. (NASDAQ: FTNT), shifting the stock rating from Hold to Buy with an increased price target of $100. This new valuation implies an upside of nearly 29% relative to Fortinet's recent trading price of $77.62. This updated target is consistent with InvestingPro's evaluation that the stock remains undervalued in the current market.
The rationale behind TD Cowen's upgrade stems from their positive outlook on Fortinet's resilience throughout fiscal year 2026, a conclusion drawn following comprehensive market checks. Central to their assessment is Fortinet's impressive gross profit margin, recorded at 80.87%, as well as a consistent revenue growth trajectory, which grew by 14.78% over the past twelve months.
While TD Cowen maintains its existing financial modeling assumptions, the firm notes possible upward revisions to its billings and revenue projections for the fourth quarter of fiscal year 2025. Present estimates forecast an 11.6% increase year-over-year in billings alongside revenue growth near 13.3%. Furthermore, the analyst team anticipates that Fortinet's fiscal year 2026 billings growth, currently placed at 11.6%, could ultimately be revised upward, underpinned by steady spending dynamics where artificial intelligence serves to enhance, rather than supplant, cybersecurity software investments.
From a valuation perspective, Fortinet is trading at less than seven times enterprise value to fiscal year 2027 revenue, which TD Cowen considers reasonable against the backdrop of expected low to mid-teen percentage growth in fiscal year 2026.
In related developments, Fortinet is gearing up to release its fourth-quarter earnings report. Truist Securities has adjusted its price target from $95 down to $88 while reaffirming its Buy rating on the stock. During the third quarter, Fortinet generated $1.17 billion in service revenue, marking a 12.7% year-over-year increase but falling just short of market expectations.
Geopolitical headwinds include China's reported limitations on foreign cybersecurity product purchases, affecting Fortinet's operations in that market. Bernstein SocGen Group continues to assign a Market Perform rating with a $76 price target despite these challenges.
On the product innovation front, Fortinet launched a Secure AI Data Center solution through a partnership with Arista Networks designed to boost security and operational efficiency for AI systems. Additionally, the company integrated its FortiGate VM virtual cloud firewall with NVIDIA's BlueField-3 data processing units, offering enhanced security capabilities without sacrificing system performance.
Security concerns remain, as Fortinet disclosed a critical vulnerability within its FortiWeb product line, which has been actively exploited. This issue carries a high severity score assigned by the Cybersecurity and Infrastructure Security Agency. Despite this, Cantor Fitzgerald maintains a Neutral rating and an $87 price target on Fortinet, reflecting a measured risk assessment.