TLDR
- TD Cowen upgraded Fortinet (FTNT) stock from Hold to Buy with a $100 price target, suggesting 29% upside potential
- The upgrade comes after channel checks indicated stability for fiscal 2026, with potential upside to Q4 estimates
- Current Q4 projections show 11.6% year-over-year billings growth and 13.3% revenue growth
- TD Cowen expects fiscal 2026 billings growth estimate of 11.6% to be revised higher
- Analyst notes AI is augmenting security software rather than replacing it, supporting stable spending patterns
TD Cowen analyst Shaul Eyal moved Fortinet to a Buy rating from Hold on Friday. The price target remains at $100, which represents roughly 29% upside from the current price of $77.62.
The upgrade follows positive channel checks suggesting the cybersecurity company will maintain stability through fiscal 2026. These market checks gave TD Cowen confidence in Fortinet’s near-term performance.
The firm kept its existing financial model intact for now. However, it sees room for improvement in fourth-quarter 2025 estimates.
Current projections call for 11.6% year-over-year billings growth and 13.3% revenue growth in Q4. TD Cowen believes both numbers could move higher.
The analyst expects the fiscal 2026 billings growth estimate to get revised upward from its current 11.6% projection. This optimism stems from stable spending patterns in the cybersecurity sector.
AI Impact on Security Spending
A key factor in the upgrade involves how artificial intelligence affects the security software market. TD Cowen’s research shows AI is not replacing security tools.
Instead, AI is enhancing existing security software capabilities. This finding supports the view that cybersecurity spending will remain steady or grow.
Companies appear to be using AI to improve their security infrastructure rather than cutting back on traditional tools. This trend benefits established players like Fortinet.
Fortinet reported impressive financial metrics in recent quarters. The company posted an 80.87% gross profit margin and 14.78% revenue growth over the last twelve months.
Service revenue reached $1.17 billion in Q3, marking a 12.7% year-over-year increase. This came in slightly below analyst expectations.
Valuation Analysis
TD Cowen views Fortinet’s current valuation as attractive. The stock trades at less than 7 times enterprise value to fiscal 2027 revenue.
This multiple looks reasonable when compared to expected growth rates. The firm anticipates low to mid-teen growth in fiscal 2026.
Fortinet recently launched a Secure AI Data Center solution with Arista Networks. The product aims to enhance AI infrastructure security and performance.
The company also integrated its FortiGate VM virtual cloud firewall with NVIDIA BlueField-3 data processing units. This enables advanced security measures without performance trade-offs.
Truist Securities previously adjusted its price target to $88 from $95 while maintaining a Buy rating. Bernstein SocGen Group rates the stock as Market Perform with a $76 price target.
China’s reported decision to restrict foreign cybersecurity product purchases has affected the stock. This includes products from Fortinet, though the full impact remains unclear.
Fortinet disclosed a critical vulnerability in its FortiWeb product. The Cybersecurity and Infrastructure Security Agency flagged the issue with a high severity score after active exploitation was detected.
TD Cowen’s upgrade to Buy with a $100 price target reflects confidence in Fortinet’s fiscal 2026 outlook based on stable market conditions and AI-driven demand for security software.
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