Freedom Capital Markets moved Fortinet (NASDAQ: FTNT) to a Hold rating from Buy on Monday, maintaining a price target of $90. The firm said current valuation levels underpin the downgrade, noting that Fortinet trades at a price-to-earnings ratio of 33.65.
The downgrade comes even as Fortinet reported fourth-quarter 2025 results that surpassed market expectations and its own guidance. The company cited the launch of a large-scale network equipment refresh cycle as a key driver behind the better-than-expected quarter. Product revenue climbed by 20% year-over-year and billings rose 18% year-over-year, figures that several brokerages highlighted when updating their assessments.
Service revenue showed steady growth, supported by expanding Unified SASE cloud offerings and the integration of recent acquisitions, though the company noted some customer caution around contract lengths. Gross profit margins remain robust at 80.46%, based on InvestingPro data, a level that underscores the companys current profitability profile.
Despite solid near-term results, Freedom Capital Markets flagged valuation as the central issue supporting its move to Hold. InvestingPro data referenced in the analyst commentary also shows that 30 analysts have revised earnings estimates downward for the upcoming period, a trend that the downgrade note cited as relevant to the stocks risk-reward profile.
Other brokerages reacted to Fortinets quarterly release with mostly constructive adjustments to their price targets and recommendations. TD Cowen reiterated a Buy rating and kept a $100 price target. BMO Capital lifted its target to $95, noting results exceeded consensus even as service revenue growth lagged expectations. RBC Capital raised its target to $90, describing the quarter as having beaten prevailing concerns and potentially laying groundwork for 2026. UBS also increased its target to $90, pointing to strong product performance and improved Enterprise License Agreement renewals. Jefferies moved its price target to $90, emphasizing that the companys 18% billings growth outpaced an expected 12%.
Analysts and the company itself are balancing the positive top-line indicators against a set of uncertainties that could pressure future margins and growth. Specifically, the analyst note highlighted risks from potential margin compression tied to rising memory prices and currency volatility. Competitive dynamics in the cybersecurity market were also listed as a factor that could challenge long-term expansion.
Freedom Capital Markets retained its $90 price objective even as it shifted the rating lower, signaling that while the firm views the shares as fairly valued at present, it recognizes the strength in the recent operating results. The market response from other brokerages reflects a split view: many see the quarterly performance as validation of product momentum, while some caveats remain around services and cost pressures.
Bottom line: Fortinet delivered stronger-than-expected fourth-quarter 2025 results with notable product and billings growth, but Freedom Capital Markets downgraded the stock to Hold citing valuation concerns; several other firms raised price targets, reflecting a mix of optimism on product momentum and caution on future margin pressures.