Fortinet (FTNT) Is Down 6.5% After Securities Lawsuits and Earnings Drop Are Announced—Has the Bull Case Changed?

• In the past week, Fortinet reported third-quarter revenue of US$1.72 billion but saw year-over-year declines in net income and earnings per share, alongside multiple law firms filing securities class action lawsuits alleging misleading statements about its firewall upgrade cycle.
• These developments come as Fortinet launched its Secure AI Data Center solution, extending its portfolio to provide protection for AI infrastructure while navigating heightened legal scrutiny over its previous business disclosures.
• We'll explore how the wave of securities lawsuits and lower net income could affect Fortinet's competitiveness and medium-term outlook.

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Fortinet Investment Narrative Recap

To be a Fortinet shareholder, one has to believe in the persistent global need for integrated, high-performance cybersecurity as threats increase and regulatory demands grow, supporting continued product and service adoption. The latest class action lawsuits, focused on alleged misstatements about Fortinet’s firewall refresh cycle, introduce a legal overhang that could pressure near-term sentiment, yet they do not materially alter the core catalyst: ongoing customer upgrades and robust enterprise security demand. The principal risk remains a potential slowdown in product growth once the current upgrade cycle ends, unless the company accelerates adoption of next-generation solutions.

Among Fortinet’s recent announcements, the launch of the Secure AI Data Center solution stands out as most relevant. This offering expands Fortinet's presence in protecting AI infrastructure, aligning closely with customer migration toward advanced, integrated security in high-growth areas, an important offset if traditional hardware upgrade demand softens and a potential driver for future recurring revenue streams.

But in contrast, the current legal challenges highlight the importance of understanding how unresolved litigation and future product revenue trends could impact...

Read the full narrative on Fortinet (it's free!)

Fortinet's outlook anticipates $9.2 billion in revenue and $2.4 billion in earnings by 2028. This scenario is built on a projected 13.1% annual revenue growth rate and a $0.5 billion increase in earnings from the current $1.9 billion.

Uncover how Fortinet's forecasts yield a $88.30 fair value, a 8% upside to its current price.

Exploring Other Perspectives

The Simply Wall St Community fair value estimates for Fortinet range from US$82.99 to US$110.39 across 26 contributors. While opinions differ, recent class action lawsuits against the company raise important questions about forward revenue visibility and investor confidence.

Explore 26 other fair value estimates on Fortinet - why the stock might be worth as much as 35% more than the current price!

Build Your Own Fortinet Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Fortinet research is our analysis highlighting 4 key rewards that could impact your investment decision.
• Our free Fortinet research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Fortinet's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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