3 Key Reasons to Buy Fortinet Stock Beyond its 11% Year-to-Date Rise

Globe and Mail

6 days ago

Fortinet FTNT shares have gained 10.6% in the year-to-date (YTD) period, outperforming the Zacks Computer and Technology sector and the S&P 500 index's decline of 1.7% and 0.4%, respectively.
FTNT's outperformance can be attributed to strong execution across key growth areas like SASE, AI-driven security operations and OT security. Record margins, robust free cash flow and rising enterprise adoption have reinforced investor confidence, positioning Fortinet as a resilient, high-growth player in an otherwise cautious tech environment.
Fortinet's rally does not tell the whole story. Let's break down three key strengths that reveal why the stock is a compelling investment in 2025.
FTNT Outperforms Sector in YTD
FTNT's Q1 Shows Profitable Growth in a Tough Market
The U.S. tariff landscape continues to evolve, but based on current conditions, there's no material impact expected on FTNT in the near term. Despite broader geopolitical uncertainties, Fortinet is still seeing strong demand for its cybersecurity offerings. The company's pipeline remains healthy, with stable close rates and sales cycles that are well within historical norms.
Total revenues in the first quarter of 2025 rose 14% year over year to $1.54 billion. Product revenues reached $459 million, up 12% year over year, supported by double-digit growth in both hardware and software solutions. FortiGate hardware performed particularly well across low-end and high-end models, while time-based software licenses grew more than 30%.
Total billings grew 14% year over year to $1.6 billion, with unified SASE and AI-driven SecOps contributing 18% and 29% growth, respectively. Gross margin expanded 380 basis points to 81.9%, and operating margin reached a record 34.2% in the first quarter. Fortinet also added more than 6,300 new customers during the quarter, up 14% from the prior year, signaling continued momentum despite broader market headwinds.
FTNT's Unified Approach Gives it a Competitive Edge
The cybersecurity market is extremely competitive and characterized by rapid technological change. Among others, Fortinet's competitors include Palo Alto Networks PANW, Cisco Systems CSCO and CrowdStrike CRWD. Shares of Palo Alto Networks, Cisco Systems and CrowdStrike have returned 3.2%, 7% and 37%, respectively, YTD.
Palo Alto Networks has partnered with NVIDIA to build AI-driven private 5G security solutions, reflecting its commitment to next-generation technologies. Cisco Systems has also deepened its collaboration with NVIDIA, aiming to deliver AI-ready data center networking solutions, which has been a game changer for the company. Meanwhile, CrowdStrike is seeing strong momentum with its Falcon platform, promoted as an 'AI-native SOC,' with growing adoption of its Charlotte AI for detection, triage, workflows, and response.
Fortinet differentiates itself from these competitors with its single, organically developed FortiOS, including its firewall, SD-WAN, secure web gateway, CASB and DLP. This unified design drove 18% growth in SASE billings and 26% in SASE ARR in the first quarter of 2025, with enterprise penetration reaching 11%, up nearly 10% sequentially. FTNT's approach reduces complexity and cost, enabling faster adoption and stronger performance. As demand shifts toward integrated, scalable platforms, Fortinet is gaining ground across secure networking, SASE and AI-driven SecOps.
FTNT Strengthens its Lead in AI and Firewall Solutions
Fortinet continues to strengthen its long-term position in AI and firewall solutions. The company now holds over 500 issued and pending AI patents, more than any peer, and has integrated AI into a dozen products, including FortiAI Assist and FortiAI Protect.
Recently, Fortinet introduced the FortiGate 700G, a high-performance firewall for mid-size enterprises, delivering up to 10x performance gains over competitors via proprietary ASIC technology, while supporting a hybrid mesh firewall architecture through its unified FortiOS platform. This launch enhances Fortinet's competitive positioning in secure networking and is expected to drive further adoption among performance-focused enterprise customers.
FTNT's Guidance for Q2 2025
Fortinet expects revenues for the second quarter of 2025 in the range of $1.59 billion to $1.65 billion, which represents growth of 13% at the midpoint. It anticipates non-GAAP earnings per share in the band of 58-60 cents.
The Zacks Consensus Estimate for second-quarter 2025 revenues is pegged at $1.62 billion, suggesting 12.96% year-over-year growth.
The consensus mark for second-quarter 2025 earnings is pegged at 59 cents per share, which has been revised upward by a penny over the past 30 days, indicating 3.51% year-over-year growth.
Fortinet's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 23.83%.
Although the company's Price/Book ratio of 40.72X is ahead of the Zacks Security industry average of 23.64X, the premium valuation is justified by Fortinet's strong market position, its fully integrated platform strategy and customer expansion across all its segments, all of which signal long-term growth and sustained competitive advantage.
FTNT's Price/Book Ratio
Conclusion: Buy FTNT Stock Now
Fortinet's YTD gains reflect strong execution and a clear focus on long-term growth. The company is steadily expanding its customer base and delivering consistent results, even in an uncertain macro environment. New product introductions, like the FortiGate 700G, highlight its commitment to performance and innovation. Operating margins remain strong, and free cash flow continues to support its financial stability. While the stock trades at a premium, that pricing aligns with Fortinet's leadership in the cybersecurity space and its growth potential.
FTNT currently carries a Zacks Rank #2 (Buy) and has a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks proprietary methodology. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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