Fortinet's Q3 Results Show Disappointing Slowdown Amid Tight Supply, BofA Says

MT Newswires Live10-29 23:27

Fortinet's (FTNT) Q3 results indicate a slowdown in some key metrics that suggest that Q2 was abnormally strong and may reflect some demand pull-forward, BofA Securities said in a note Thursday.

The investment firm said that these dynamics combined with "lingering component and inventory issues,

now offset positive macro tailwinds due to AI."

BofA said the company's Q3 results were a mixed print that "fell well short" of investor expectations for some key metrics. The investment firm noted revenue grew 20.5% to $2.078 billion and beat consensus estimate for $2.066 billion, and EPS of $0.94 also beat the Street's estimate of $0.86.

However, key metrics were missed, BofA said, adding the company's 3Q Product revenue rose 37%, which is a slowdown from Q2's 52% growth and below the expectations of investors that BofA spoke with.

Also, Services revenue, which BofA said should be "more durable and predictable" missed the consensus estimate, the note said.

BofA downgraded Fortinet to neutral from buy and lowered the company's price target to $140 from $220.

Fortinet shares were falling over 22% in recent trading.

Price: 135.22, Change: -38.86, Percent Change: -22.32

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