Fortinet (FTNT) Beat Earnings — So Why Did It Just Get Downgraded?

TLDR

• Freedom Capital Markets downgraded Fortinet (FTNT) from Buy to Hold, citing valuation concerns after a strong Q4 beat
• The price target was kept unchanged at $90
• Fortinet posted 20% product revenue growth and 18% billings growth in Q4 2025
• 30 analysts have revised earnings estimates downward for the upcoming period
• Risks include margin compression from rising memory prices, currency volatility, and increased competition

Fortinet (FTNT) was downgraded to Hold from Buy by Freedom Capital Markets on Monday, with analyst Almas Almaganbetov keeping the price target steady at $90. The reason: valuation. The stock currently trades at a P/E ratio of 33.65.

Fortinet, Inc., FTNT

The downgrade came despite Fortinet posting a strong Q4 2025. Product revenue jumped 20% and billings rose 18% year-over-year, well above the 12% analysts had expected.

The quarter was driven in part by a large-scale network equipment refresh cycle. The service segment also held up, with Unified SASE cloud solutions expanding and recent acquisitions folding in smoothly.

That said, some customers showed caution around contract durations. It’s a small note, but worth flagging.

Gross profit margins came in at 80.46%, according to InvestingPro data — a strong number by any measure.

Other Analysts Remain Bullish

While Freedom Capital pulled back its rating, several other firms moved in the opposite direction following Q4 results.

TD Cowen kept its Buy rating with a $100 price target. BMO Capital raised its target to $95, though it noted service revenue growth fell short of projections.

RBC Capital lifted its target to $90, calling the quarter a solid foundation for 2026. UBS also moved its target to $90, pointing to strong product growth and improved Enterprise License Agreement renewals.

Jefferies raised its target to $90 as well, citing the 18% billings growth that came in well above the 12% consensus estimate.

Headwinds on the Horizon

Despite the Q4 strength, there are clouds forming. Rising memory prices and currency volatility could pressure margins going forward. Competitive pressure in the cybersecurity space is also picking up.

InvestingPro data shows 30 analysts have revised their earnings estimates downward for the upcoming period — a number that’s hard to ignore.

Freedom Capital’s move reflects a straightforward valuation call. The business performed well. The stock price may have just gotten ahead of itself.

The $90 price target was maintained even with the downgrade, putting a ceiling on where Freedom Capital sees near-term upside.

Fortinet shares were down 4.52% at the time of the downgrade

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