Should You Buy, Sell or Hold Fortinet Stock Before Q1 Earnings?

Fortinet FTNT is slated to report first-quarter 2025 results on May 7.For the first quarter of 2025, Fortinet expects revenues in the range of $1.5-$1.56 billion. It anticipates non-GAAP earnings per share in the band of 52-54 cents.The Zacks Consensus Estimate for first-quarter revenues is pegged at $1.54 billion, suggesting year-over-year growth of 13.54%. The consensus mark for earnings is pinned at 53 cents per share. The estimate indicates a year-over-year increase of 23.26%.See the Zacks Earnings Calendar to stay ahead of market-making news.FTNT Estimate MovementImage Source: Zacks Investment ResearchFTNT Earnings Surprise HistoryIn the last reported quarter, the company delivered an earnings surprise of 23.33%. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 24.76%.Earnings Whispers for FTNTOur proven model predicts an earnings beat for Fortinet this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.FTNT has an Earnings ESP of +3.77% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Factors Shaping Upcoming Results of FTNTAs Fortinet gears up to post its first-quarter 2025 earnings, investors should hold their positions for now, as near-term caution tempers the company’s otherwise strong performance trajectory.  SASE and AI-led security remain Fortinet’s growth engines. In the fourth quarter of 2024, FortiSASE ARR grew 96% year over year, while pipeline activity rose 90%. At the end of the quarter, more than 70% of large enterprise customers used Fortinet’s SD-WAN, supporting future upselling. The company’s all-in-one platform and custom ASICs give it a technical edge as adoption expands across cloud security and AI-driven detection solutions.The early stages of a hardware refresh cycle also contributed to strength in the fourth quarter of 2024, particularly among large enterprises. Although the company expects momentum to build in the second half of 2025, some of this demand has already begun to materialize in the  quarter under review. Tariff changes and economic uncertainty could have limited first-quarter upside. Fortinet flagged weakness in Canada, Latin America, and the U.S. federal space, tied to new policy and budget delays. Further, integration of Linksys and Perception Point is expected to reduce operating margin by 40 basis points. Infrastructure spending will also rise to $80-$100 million, putting pressure on short-term margins even as these investments support longer-term scale.Despite these pressures, Fortinet’s performance in the SMB segment remains a standout, with over 30% growth and strong channel-driven momentum. The company’s ability to scale its unified platform across both enterprise and SMB markets provides a key differentiator. While the competitive landscape remains fierce from rivals like Palo Alto Networks PANW, Zscaler ZS and CrowdStrike CRWD, Fortinet’s focus on reducing complexity, expanding sales capacity, and accelerating SASE adoption positions it for durable long-term growth. Investors, however, may want to wait for greater clarity on tariff impacts and hardware refresh momentum before adding to their positions.Top-Line Growth Estimates for Q1The Zacks Consensus Estimate for first-quarter 2025 Americas revenues is pegged at $635 million, indicating a 4.65% decline from the figure reported in the year-ago quarter.The consensus mark for Asia Pacific and Japan revenues is pinned at $308 million, indicating growth of 2% from the figure reported in the year-ago quarter.Moreover, the consensus mark for Europe, Middle East and Africa revenues is pegged at $600 million, suggesting a 13.3% decrease from the figure reported in the year-ago quarter.The Zacks Consensus Estimate for first-quarter 2025 total billings is pegged at $1.566 billion, indicating a 21.8% decrease from the figure reported in the year-ago quarter.FTNT Price Performance & Stock ValuationShares of Fortinet have gained 12.4% in the year-to-date period, outperforming the Computer and Technology sector and the S&P 500 index’s decline of 7.5% and 3.7%, respectively. The company’s outperformance can be attributed to its establishment as a leading provider of SASE solutions. SASE adoption is accelerating across enterprises and to keep pace, Fortinet continuously enhances FortiOS, integrating advanced networking and security into a unified platform.FTNT’s YTD Price PerformanceImage Source: Zacks Investment ResearchFortinet’s valuation may be a concern for some investors. The stock is trading at a significant premium compared to the broader Zacks Security industry. As of the latest data, FTNT’s Price/Book ratio hovers around 54.66, well above the industry’s 25.36, reflecting investors' high growth expectations. The Value Score of F further reinforces a stretched valuation for Fortinet at this moment. FTNT Trades at a PremiumImage Source: Zacks Investment ResearchInvestment ConsiderationsFortinet enters first-quarter 2025 on solid footing with strong product momentum, a growing SASE pipeline, and robust SMB demand. However, investors should maintain a hold stance ahead of earnings. Tariff headwinds, U.S. federal budget delays, and softness in Canada and Latin America may weigh on near-term performance. Integration of recent acquisitions and rising infrastructure spend could also pressure margins. While the hardware refresh cycle and AI-led security tools offer long-term upside, these initiatives are still in early stages and may take time to deliver meaningful impact. With growing competition in the cybersecurity market, investors may benefit from waiting for a clearer entry point.ConclusionFortinet’s long-term outlook looks promising, but its current valuations, which largely reflect its projected growth, suggest that the stock is not a good pick for a value investor. Given macroeconomic headwinds and intense competition that are expected to impact performance in the first quarter, investors should maintain existing positions while awaiting a more favorable entry point. Growing demand for the company’s SASE solutions and recent acquisitions provide long-term upside, but prudent investors might benefit from patience ahead of first-quarter results.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Fortinet, Inc. (FTNT): Free Stock Analysis Report Palo Alto Networks, Inc. (PANW): Free Stock Analysis Report Zscaler, Inc. (ZS): Free Stock Analysis Report CrowdStrike (CRWD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks