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Fortinet (FTNT - Free Report) Stock Plunges After Q3 Earnings: Time to Buy the Dip?
Cybersecurity leader Fortinet saw its shares plunge 20% on Thursday despite reporting better-than-expected third-quarter results and raising its full-year guidance.
The sharp selloff comes after FTNT had rallied over 100% year-to-date heading into its earnings release on Wednesday evening, as investors grew increasingly optimistic about artificial intelligence-driven cybersecurity demand.
With Fortinet competing against industry heavyweights Palo Alto Networks and CrowdStrike, the correction raises an important question: Is FTNT stock now an attractive buy-the-dip opportunity?
Fortinet's Q3 Results: What Caused the Selloff?
Fortinet reported adjusted Q3 earnings of $0.91 per share, beating expectations of $0.85 and climbing 23% year over year. Revenue increased 20% to $2.08 billion, exceeding estimates of $2.06 billion.
Billings, which measure the value of business billed to customers during a period, rose 29% to $2.34 billion, reflecting healthy demand for Fortinet's cybersecurity solutions.
However, investors were disappointed by slowing product revenue growth, which moderated to 37% from 52% in Q2. More concerning, service revenue increased just 13% year over year, prompting management to lower its full-year service revenue forecast to $5.15-$5.17 billion from $5.18-$5.22 billion.
With expectations elevated following FTNT's massive rally, signs of slowing growth triggered aggressive profit-taking.
That said, it's noteworthy that the cybersecurity leader has now exceeded the Zacks EPS Consensus for a remarkable 35 consecutive quarters, posting an average earnings surprise of 17.74% in its last four quarterly reports.
Fortinet's Growth Outlook Remains Encouraging
Encouragingly, Fortinet raised its FY26 revenue outlook to $8.125-$8.215 billion, implying approximately 20% annual growth at the midpoint.
Management also increased its full-year billings forecast to $9.57-$9.72 billion, representing 28% annual growth at the midpoint. Plus, Fortinet expects adjusted earnings of $3.54-$3.58 per share, implying over 28% growth from EPS of $2.76 in FY25.
Demand for next-generation firewalls, secure networking, and AI-driven cybersecurity solutions should remain important growth catalysts as enterprises strengthen their digital infrastructure.
Furthermore, Fortinet expanded its share repurchase authorization by $1.2 billion, providing additional support for shareholder returns.
Bottom Line: Time to Buy the Dip in FTNT?
Fortinet's post-earnings plunge appears to present an intriguing buying opportunity for long-term investors, particularly as FTNT now trades at a more reasonable 37X forward earnings multiple, down from roughly 50X before its earnings release.
This also represents a steeper discount to its Zacks Security industry average of 56X, making Fortinet's valuation increasingly attractive given its strong cybersecurity growth prospects.
For now, FTNT sports a Zacks Rank #2 (Buy), although slowing service revenue growth remains a concern that investors should monitor.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release
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Zacks Investment Ideas feature highlights: Fortinet, Palo Alto Networks and CrowdStrike
For Immediate Release
Chicago, IL – October 30, 2026– Today, Zacks Investment Ideas feature highlights Fortinet (FTNT - Free Report) , Palo Alto Networks (PANW - Free Report) and CrowdStrike (CRWD - Free Report) .
Fortinet (FTNT - Free Report) Stock Plunges After Q3 Earnings: Time to Buy the Dip?
Cybersecurity leader Fortinet saw its shares plunge 20% on Thursday despite reporting better-than-expected third-quarter results and raising its full-year guidance.
The sharp selloff comes after FTNT had rallied over 100% year-to-date heading into its earnings release on Wednesday evening, as investors grew increasingly optimistic about artificial intelligence-driven cybersecurity demand.
With Fortinet competing against industry heavyweights Palo Alto Networks and CrowdStrike, the correction raises an important question: Is FTNT stock now an attractive buy-the-dip opportunity?
Fortinet's Q3 Results: What Caused the Selloff?
Fortinet reported adjusted Q3 earnings of $0.91 per share, beating expectations of $0.85 and climbing 23% year over year. Revenue increased 20% to $2.08 billion, exceeding estimates of $2.06 billion.
Billings, which measure the value of business billed to customers during a period, rose 29% to $2.34 billion, reflecting healthy demand for Fortinet's cybersecurity solutions.
However, investors were disappointed by slowing product revenue growth, which moderated to 37% from 52% in Q2. More concerning, service revenue increased just 13% year over year, prompting management to lower its full-year service revenue forecast to $5.15-$5.17 billion from $5.18-$5.22 billion.
With expectations elevated following FTNT's massive rally, signs of slowing growth triggered aggressive profit-taking.
That said, it's noteworthy that the cybersecurity leader has now exceeded the Zacks EPS Consensus for a remarkable 35 consecutive quarters, posting an average earnings surprise of 17.74% in its last four quarterly reports.
Fortinet's Growth Outlook Remains Encouraging
Encouragingly, Fortinet raised its FY26 revenue outlook to $8.125-$8.215 billion, implying approximately 20% annual growth at the midpoint.
Management also increased its full-year billings forecast to $9.57-$9.72 billion, representing 28% annual growth at the midpoint. Plus, Fortinet expects adjusted earnings of $3.54-$3.58 per share, implying over 28% growth from EPS of $2.76 in FY25.
Demand for next-generation firewalls, secure networking, and AI-driven cybersecurity solutions should remain important growth catalysts as enterprises strengthen their digital infrastructure.
Furthermore, Fortinet expanded its share repurchase authorization by $1.2 billion, providing additional support for shareholder returns.
Bottom Line: Time to Buy the Dip in FTNT?
Fortinet's post-earnings plunge appears to present an intriguing buying opportunity for long-term investors, particularly as FTNT now trades at a more reasonable 37X forward earnings multiple, down from roughly 50X before its earnings release.
This also represents a steeper discount to its Zacks Security industry average of 56X, making Fortinet's valuation increasingly attractive given its strong cybersecurity growth prospects.
For now, FTNT sports a Zacks Rank #2 (Buy), although slowing service revenue growth remains a concern that investors should monitor.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release