Analysts cut Fortinet rating shares as firewall refresh catalyst fizzles out

Investing.com -- Multiple Wall Street analysts downgraded Fortinet (NASDAQ: FTNT) shares following the company’s latest earnings release, which showed that a much-anticipated firewall refresh cycle is already halfway complete, undermining earlier growth expectations.

Morgan Stanley downgraded Fortinet to Equal-weight from Overweight, citing the “meaningful change in firewall refresh expectations.”

The firm had based its bullish thesis on a projected $400 million to $450 million product revenue opportunity tied to the refresh between 2025 and 2026.

“Given that firewall refresh is now 40-50% complete… the catalyst we had been expecting is no longer present,” Morgan Stanley wrote, adding that weaker-than-expected subscription revenue and free cash flow further pressured the stock.

KeyBanc also cut Fortinet to Sector Weight, describing the second-quarter update as “cold water on the refresh cycle.”

The firm said the refresh cohort through 2026 was further along than anticipated, and visibility into upgrades from lower-end appliances remained low.

“The underlying product revenue growth excluding the refresh benefit of flat-to-down y/y in 1H25 is worse than we expected,” KeyBanc wrote, warning of a “challenging setup” into 2026.

Piper Sandler lowered its rating to Neutral, saying it was “tapping out” as the refresh impact now “appears obfuscated.”

While second-quarter results were a “step in the right direction,” the firm said investors are now facing a “multi-quarter, show-me situation.”

Fortinet shares are down 25% on Thursday, trading around the $72.14 mark.

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