A poor prediction from Fortinet (FTNT.O) contributed to a selloff in cybersecurity stocks and a near-18% decline, exacerbating concerns about client spending slowing down in an unstable economy.
If the current losses continue, the market value of the firm would be practically wiped out by $8 billion. Palo Alto (PANW.O), ZScaler (ZS.O), and CrowdStrike (CRWD.O), competitors, had declines ranging from 0.6% to 2.6%.
Fortinet announced on Thursday that it has lowered its annual revenue forecast to $1.50 billion and anticipates current-quarter sales to be between $1.38 billion and $1.44 billion, according to LSEG statistics.
“We thought sentiment reflected an expectation for a miss or guidedown, but the magnitude was even worse than our bogeys,” analysts at Raymond James stated.
The industry is becoming more competitive as customers want businesses that can handle all of their cybersecurity needs from one place, hurting the expansion of smaller competitors and driving up sales at companies like Palo Alto.
CFO Keith Jensen stated on Thursday that Fortinet “continues to see increased deal scrutiny and longer sales cycles, which is constraining near-term results.”
After two years of sharp increases during the pandemic, growth decreased in several areas of the company’s operations as demand returned to normal.
Fortinet had a disastrous quarter, according to Wedbush analysts. “It’s a head scratcher how weak things got at Fortinet.”
The median was pushed to $59 due to at least 18 analysts lowering their price targets and eight brokerages downgrading the firm overall, according to LSEG data.
This year, Fortinet shares have increased by over 18%. Currently, it is trading at around 33 times its projected 12-month earnings, which is higher than Palo Alto’s 44.6 and CrowdStrike’s 54.5.