Fortinet (FTNT.US) recently reported strong Q3 results, but analysts highlight concerns over the cybersecurity firm's ability to accelerate service revenue growth by 2026. The company posted adjusted EPS of $0.74, beating consensus estimates of $0.63. Revenue rose 14% YoY to $1.72 billion, surpassing the expected $1.7 billion.

For Q4, Fortinet projects revenue between $1.83 billion and $1.89 billion (midpoint $1.86 billion), below the anticipated $1.88 billion. Adjusted EPS is forecast at $0.73–$0.75, exceeding the $0.67 estimate. Full-year 2025 revenue guidance was narrowed to $6.72–$6.78 billion (prior range: $6.68–$6.83 billion), with adjusted gross margins expected at 80.3%–80.8% (vs. previous 79%–81%).

Needham maintained a "Hold" rating, citing sluggish service revenue growth attributed to lagging effects from last year’s product revenue decline (typical service cycle: 29 months). Management pointed to new innovations like ASICs and FortiOS but emphasized service growth improvements likely only in H2 2026.

Citigroup kept a "Neutral" rating but cut its target to $83 from $85, noting a 10th consecutive quarter of decelerating service revenue growth and no near-term bottom (projecting ~10% growth in H1 2026, improving to ~13% in H2).

Mizuho reiterated "Underperform" and lowered its target to $72 from $75, citing execution challenges and stiff competition in SASE/SecOps markets, where Fortinet entered late.

Oppenheimer remained "Neutral," questioning growth stability amid weak service attachment rates and competitive pressures, while SASE annualized revenue declines cloud long-term prospects.

Wedbush was the most bullish, maintaining "Outperform" but trimming its target to $90 from $100. It highlighted strong margins—EPS of $0.74 (vs. $0.63 consensus), gross margin of 81.6% (vs. 80.6% expected), and operating margin of 36.9% (vs. 32.9% expected)—driven by cost discipline despite increased investments.