Fortinet's revenue miss is sending the stock to 12-month lows
While most of Wall Street cheers freefalling bond yields and jobs data, Fortinet Inc (NASDAQ:FTNT) is sitting out the festivities today. The stock is down 17.6% to trade at $46.88, after the cybersecurity company's third-quarter revenue of $1.33 billion fell short of the consensus estimates of $1.50 billion. Worse, Fortinet issued disappointing guidance for the fourth quarter, citing weaker-than-usual spending amid an uncertain economy.
An avalanche of bear notes have ensued, including 16 price-target cuts, the worst from Mizuho to $50 from $65. Four brokerages issued downgrades as well, with J.P. Morgan Securities noting "visibility into the potential rate of recovery in fiscal year 2024 is limited."
The report was so brutal that sector peers Palo Alto Networks (PANW) is 2.3% lower today, while CrowdStrike (CRWD) and Zscaler (ZS) are higher but seeing limited gains.
History doesn't repeat, but it does rhyme. Out of the gate this morning, Fortinet stock traded at its lowest level since Nov. 3 of last year, when the stock saw a post-earnings collapse of 13.7%. Today, the shares are on track for their worst single-session drop since -- you guessed it -- a post-earnings bear gap of 25.1% on Aug. 4.
FTNT has now ceded its year-to-date breakeven level, and is barely holding its 4% year-over-year lead. While the stock is on the short-sell restricted list today, there's ample room for short sellers to come aboard too, with a slim 2% of FTNT's total available float sold short.