Fortinet exposed to firewall refresh delays risk - BTIG

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By Sam Boughedda

Fortinet (NASDAQ:FTNT) was downgraded to Neutral from Buy with its price target maintained at $62 per share by BTIG analysts on Friday.

The analysts said in a research memo that the firm is downgrading the stock due to weakening CISO firewall commentary.

"Over the last two weeks, we spoke with 7 contacts (5 CISO's, a former CIO / Advisory Practice, and an Industry Analyst) to gain a better view on large enterprise firewall spending trends and are downgrading FTNT shares to Neutral due to increased appliance refresh concerns," explained the analysts. "To be perfectly clear, we are still working through our partner checks and are not making a call on FTNT’s Q4’22 results at this time. That said, we have consistently heard increased concerns on firewall refresh delays in 2023 from our contacts who have a view on large enterprise spending."

BTIG believes Fortinet is most exposed to the firewall refresh delays risk.

"While our contacts continue to see firewalls as a critical part of security architectures, there is clearly a trend towards delayed refresh activity in 2023," the analysts added.

The analysts also acknowledged that Fortinet has "done an excellent job" in diversifying its business over the last few years and gaining traction with new offerings. However, they add that its strategy still heavily revolves around the sale of appliances.