Morgan Stanley downgraded Fortinet (FTNT.US) from "Equal Weight" to "Underweight" and lowered its target price from $78 to $67, partly due to disappointing firewall refresh performance.

In a report to investors on Tuesday, a team led by Morgan Stanley analyst Meta Marshall stated: "We believe Fortinet's strategy of attaching more products to its installed customer base will continue to succeed, but due to smaller-than-expected firewall refresh volumes, we think fiscal 2026/2027 earnings forecasts may need to be revised downward, which could negatively impact its stock price."

Marshall added: "However, given that free cash flow multiples remain in the low-to-mid 20x range, and we believe growth rates could reach high single digits after product refreshes, we tend to view the risk-reward ratio as unfavorable in the short term."

Marshall noted: "Investors believe the new management team has the capability to re-accelerate revenue growth, but this expectation is not yet reflected in estimates, although uncertainty remains in the short term. Since the new CEO only took office at the end of last year, investors may continue to show some patience in the short term."

Despite downgrading Fortinet's rating, Morgan Stanley maintained its "Equal Weight" rating on competitor Check Point Software Technologies (CHKP.US).