FTNT Stock Down 14.6% in 3 Months: Buy the Dip or Wait for Recovery?

Fortinet FTNT has experienced a turbulent period over the past three months, with its stock declining approximately 14.6%. This downturn stands in stark contrast to the broader Zacks Security industry, which has rallied 11% during the same timeframe. The stock reached an all-time high of $114.82 in February 2025 but has since retreated to the low-$80s range, establishing a 52-week low of $70.12. This volatility primarily stemmed from August guidance regarding the company's FortiGate firewall upgrade cycle, which triggered a sharp 22% single-day decline.

Despite this underperformance, the cybersecurity leader's fundamental strengths and strategic initiatives suggest that current shareholders should maintain their positions, while prospective investors might benefit from exercising patience before establishing new positions.

Strategic Innovation Drives Long-Term Value

The company has demonstrated remarkable commitment to innovation throughout 2025, particularly in AI and cloud security domains. In April 2025, Fortinet expanded its FortiAI platform across its entire Security Fabric, embedding AI-driven capabilities that enhance threat protection, streamline security operations, and secure employee use of generative AI services. The expanded FortiAI suite encompasses FortiAI-Assist for operational automation, FortiAI-Protect for AI application monitoring, and FortiAI-SecureAI for protecting AI infrastructure across major cloud providers. These advancements leverage more than 500 AI patents issued and pending, representing more than 15 years of AI innovation investment.

The company's cloud security initiatives have gained significant traction. In August 2025, Fortinet expanded FortiCloud with identity, secure storage, and communication services, strengthening its position in the modern enterprise market. The company's 2025 State of Cloud Security Report highlighted persistent challenges facing organizations, including skills shortages affecting 95% of professionals and declining confidence in real-time threat handling. Fortinet addressed these concerns through enhanced automation capabilities and comprehensive training programs through its Fortinet Training Institute.

Additionally, the company unveiled its FortiMail Workspace Security suite, extending protection beyond email to include browser and collaboration security. These AI-powered enhancements directly counter the rising tide of AI-enabled cybercrime, with the company's 2025 Global Threat Landscape Report indicating that 85% of security professionals link increased cyberattacks to generative AI tools. The integration of FortiDLP with advanced data lineage and sequence detection capabilities strengthens protection against both external threats and insider risks across dynamic work environments.

Forward Guidance Signals Continued Growth Trajectory

The full-year 2025 guidance reinforces the company's growth momentum. Management raised the midpoint of billings guidance by $100 million to a range of $7.325 billion to $7.475 billion, representing 13% annual growth. Full-year revenues are projected between $6.675 billion and $6.825 billion, with diluted non-GAAP earnings per share expected in the range of $2.47 to $2.53. The company expects to achieve the Rule of 45 for the sixth consecutive year, demonstrating its ability to balance growth with profitability. Non-GAAP gross margins are anticipated between 79% and 81%, while non-GAAP operating margins should reach 32% to 33.5%, reflecting disciplined operational execution despite aggressive investments in research and development.

The Zacks Consensus Estimate for 2025 earnings is pegged at $2.52 per share, indicating growth of 6.33% year-over-year.

Fortinet, Inc. Price and Consensus

Fortinet, Inc. price-consensus-chart | Fortinet, Inc. Quote

Competitive Landscape and Valuation Concerns

The competitive environment remains intense across the cybersecurity landscape. CrowdStrike CRWD has demonstrated strong momentum with shares rising more than 19.6% in three months, driven by its AI-native endpoint security platform and Falcon Flex subscription model expansion. CrowdStrike partnered with Zscaler in August 2025 to deliver enhanced security operations capabilities, strengthening both companies' market positions. Zscaler ZS has gained 14.9% in three months, benefiting from robust cloud-native Zero Trust adoption and expanding enterprise customer count. Meanwhile, Check Point Software Technologies CHKP has posted more modest gains of approximately 7% in three months, reflecting challenges in transitioning to cloud-based offerings.

FTNT Underperforms Competitors in 3-Months

The valuation premium represents a significant consideration for potential investors. With a Price-to-Book ratio of 31.31x, the stock trades at a significant premium to the broader Zacks Security industry average, suggesting limited upside potential at current levels. This elevated valuation indicates that much of the company's growth prospects and market leadership position may already be fully reflected in the current stock price.

FTNT’s Price/Book Ratio Suggests Premium Valuation

Compelling Reasons to Hold for Current Shareholders

For existing shareholders, multiple strategic factors support maintaining positions despite recent price weakness. The company's innovation pipeline, backed by over 500 AI-related patents and more than 15 years of AI research investment, positions it advantageously against emerging threats and competitive pressures. The FortiAI platform's expansion across the Security Fabric, combined with FortiCloud infrastructure investments of $380 million to $430 million planned for 2025, demonstrates management's commitment to maintaining technological leadership. These investments in AI-driven security, cloud-native capabilities, and automation address critical pain points facing enterprises struggling with cybersecurity skills shortages and increasingly sophisticated threat landscapes.

However, prospective investors should exercise patience despite the company's fundamental strengths. The premium valuation, combined with competitive pressures, suggests waiting for more attractive entry points. Fortinet currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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