Results: Fortinet, Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts

Shareholders will be ecstatic, with their stake up 23% over the past week following Fortinet, Inc.'s (NASDAQ:FTNT) latest third-quarter results. Revenues were US$1.5b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.70, an impressive 58% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Fortinet

After the latest results, the 41 analysts covering Fortinet are now predicting revenues of US$6.61b in 2025. If met, this would reflect a solid 16% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to accumulate 5.8% to US$2.11. In the lead-up to this report, the analysts had been modelling revenues of US$6.59b and earnings per share (EPS) of US$1.95 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target rose 9.0% to US$85.66, suggesting that higher earnings estimates flow through to the stock's valuation as well. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Fortinet, with the most bullish analyst valuing it at US$111 and the most bearish at US$62.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Fortinet shareholders.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Fortinet's revenue growth is expected to slow, with the forecast 12% annualised growth rate until the end of 2025 being well below the historical 22% p.a. growth over the last five years. Compare this to the 420 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 12% per year. So it's pretty clear that, while Fortinet's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Fortinet following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Fortinet going out to 2026, and you can see them free on our platform here.

You can also see our analysis of Fortinet's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.