HSBC Downgrades Fortinet (FTNT) to Reduce, 'It's slow time'
HSBC analyst Stephen Bersey downgraded Fortinet (NASDAQ: FTNT) from Hold to Reduce with a price target of $57.00 (from $49.00).
The analyst commented: "We think a slowdown in top-line growth and operating margin erosion will continue for the foreseeable future. We are less optimistic about Fortinet’s end-market demand reaccelerating in 2H24 and 2025e and take a cautious stance. We expect Fortinet to struggle with achieving growth rates anywhere closer to its recent historical level of >25%. At the mid-point of the company’s guidance range, revenue growth is expected to decelerate to 5.4% y-o-y in 1Q24e (+8.7% in FY24e) and billings to decline by 5.5% y-o-y (+1.6% in FY24e). Our new 2024e estimates forecast the company’s turnover to decelerate to 10.6% y-o-y, to USD5.9bn, non-GAAP OPM shrinking y-o-y by 0.7ppt, to 27.7%, and non-GAAP EPS rising by 12.9% y-o-y to USD1.84. For 2025e, we forecast the company’s turnover to rise by 11.5% y-o-y to USD6.5bn, non-GAAP OPM shrinking further by another 0.7ppt y-o-y, to 27%, and non- GAAP EPS rising by 10.9% y-o-y to USD2.04."
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Shares of Fortinet closed at $67.48 yesterday.