Cybersecurity firm Fortinet experienced a significant drop in its stock price following its disappointing third-quarter results. The company’s 2024 outlook for FTNT stock fell below expectations due to slowing growth in the market for network “firewall” appliances. This decline in demand for on-premise devices is attributed to a shift in favor of cybersecurity services delivered through remote cloud computing platforms. Despite this setback, Palo Alto Networks, another player in the network firewall market, has seen a 79% increase in its stock price in 2023, partly due to its expansion into cloud-based services.
Fortinet plans to refocus on Secure Access Service Edge (SASE), which supports remote workers and branch offices. This move aligns with the growing market for SASE products, which provide more secure alternatives to virtual public networks (VPNs). Other companies in this market, including Zscaler and Palo Alto Networks, have also capitalized on this trend.
Analysts predict that Palo Alto Networks’ upcoming earnings report on November 15 could impact its stock price significantly, with estimates of profit growth at 40% to $1.16 per share. However, Fortinet’s recent disappointing results have led some analysts to downgrade FTNT stock and express the need for patience during the company’s transition from hardware to software-as-a-service (SaaS) offerings.
