Core Insights - Cisco Systems' security business is experiencing significant growth, with revenues increasing by 59% in fiscal 2025 to $8.09 billion, representing 19.5% of total revenues [1][10] - The acquisition of Splunk has enhanced Cisco's security offerings, particularly in Threat Intelligence, Detection, and Response (TIDR) and Extended Detection and Response (XDR) [2][10] - Cisco's security revenues for Q4 fiscal 2025 reached $1.95 billion, a 9% year-over-year increase, driven by the integration of Splunk and the expansion of Secure Access Service Edge (SASE) solutions [3][10] Security Business Performance - The integration of Splunk has led to a 14% year-over-year growth in new logos for Splunk, with Cisco adding 750 new customers through its security solutions in the reported quarter [3][10] - Orders for Cisco's security business grew in the mid-single digits, indicating positive growth prospects [3] Future Estimates - The Zacks Consensus Estimate for Q1 fiscal 2026 service revenues is projected at $2.24 billion, reflecting an 11% growth compared to the previous year [4] - The earnings estimate for Q1 fiscal 2026 is set at 98 cents per share, suggesting a 7.7% increase from the same quarter last year [13] - For fiscal 2026, the earnings estimate is $4.04 per share, indicating a 6% growth from the prior year [14] Competitive Landscape - Cisco faces strong competition in the security sector from companies like Fortinet and Okta, which have established innovative portfolios and strong market positions [5][6][7] - Fortinet is recognized for its extensive AI capabilities and has evolved into a comprehensive security ecosystem [6] - Okta's AI-powered offerings are gaining traction, particularly in identity management and security [7] Stock Performance - Cisco's stock has appreciated by 18.6% year-to-date, underperforming the broader Zacks Computer and Technology sector, which has returned 24% [8][9] - Cisco's stock is currently trading at a premium, with a trailing 12-month price/book ratio of 5.93X compared to the industry's 5.69X [15]

Core Insights - Fortinet (FTNT) is at a pivotal moment as its firewall upgrade cycle is halfway through, with 40-50% of the refresh opportunity completed, driven by customers replacing legacy systems with Next-Generation Firewalls (NGFWs) before their 2026 end-of-service dates [1] Financial Performance - In Q2 2025, Fortinet's billings increased by 15% year-over-year to $1.78 billion, indicating strong demand for its advanced NGFWs, which integrate AI-driven threat prevention, zero-trust access, and secure SD-WAN [2] - The company anticipates that approximately 650,000 firewall units will reach end-of-service by late 2026, followed by another 350,000 low-end units in 2027, presenting a stable revenue opportunity [2] - Fortinet raised its 2025 billings guidance by $100 million to a range of $7.325-$7.475 billion, reflecting confidence in continued demand [3] Growth Projections - The Zacks Consensus Estimate projects Fortinet's total revenues to grow by 13.29% in 2025 and 11.05% in 2026, indicating steady double-digit growth [4] - Earnings estimates for Fortinet are $2.52 per share for 2025 and $2.77 per share for 2026, suggesting year-over-year earnings growth of 6.33% for 2025 and 9.83% for 2026 [13] Competitive Landscape - Fortinet competes with Palo Alto Networks (PANW) and Check Point Software Technologies (CHKP) in the next-generation firewall market. While PANW excels in enterprise deployments and advanced cloud integration, Fortinet maintains an edge in cost efficiency for mid-sized businesses [5] - Check Point emphasizes a prevention-first security approach, but Fortinet's integrated Security Fabric and faster innovation provide it with a competitive advantage in scalability and efficiency [6] Valuation Metrics - Fortinet shares have declined by 10.4% year-to-date, underperforming the Zacks Security industry's 23.2% rally and the broader Computer and Technology sector's 23.8% growth [7] - The company appears overvalued with a forward 12-month price-to-sales ratio of 8.84, higher than the sector's average of 6.94 [10]

We recently published 10 Stocks Wall Street is Watching Heading into October. Palo Alto Networks, Inc. (NASDAQ:PANW) is one of the stocks Wall Street is watching. Stephanie Link, Hightower Advisors’ chief investment strategist and portfolio manager, recently talked about her bullish outlook on the cybersecurity industry and explained why she likes Palo Alto Networks. “I think cyber security is certainly something that we’re in very early innings, something like the second or third innings, and I think a ...

Company Overview - Fortinet, Inc. (NASDAQ: FTNT) is a prominent American cybersecurity company recognized for its firewall and network security solutions [2] - The company has achieved a total stock increase of 6.9% over the last five consecutive days, adding approximately $4.5 billion to its market capitalization, which now stands at about $65 billion [2] Financial Performance - Fortinet has demonstrated strong financial performance, characterized by consistent revenue growth, expanding margins, and healthy free cash flow, indicating operational and financial discipline [4] - Despite recent gains, the stock is still 9.7% lower than its value at the close of 2024, while the year-to-date returns for the S&P 500 are at 13.2% [2] Industry Context - The cybersecurity sector is experiencing rapid expansion due to digital transformation, cloud adoption, IoT devices, and hybrid work environments, leading to a high demand for comprehensive security solutions [3] - Investors are assigning premium valuations to leading cybersecurity firms, including Fortinet, reflecting the sector's growth potential [4] Market Trends - Fortinet's recent stock performance indicates increasing investor confidence, as a series of winning days can signal momentum that may lead to further buying activity [7] - There are currently 57 S&P 500 constituents with three or more consecutive days of gains, highlighting a broader trend of positive market sentiment [8]

The technology sector has been replete with several IPOs this year, primarily led by fintech. However, companies from the cybersecurity sector have shied away from going public in one of the hottest IPO markets in a long time, with SailPoint (SAIL) being a notable exception, which actually made a comeback in the public markets. This is set to change with Santa Clara, CA-based Netskope (NTSK). More News from Barchart About Netskope Founded in 2012, Netskope is a cloud-security company specializing in pr ...

Group 1 - Fortinet, Inc. (NASDAQ: FTNT) is recognized as a growing cybersecurity hardware and appliance company, particularly noted for its Secure Access Service Edge (SASE) offerings [1] - The company is expected to experience volatility in the short term due to shifts in the hardware market [1] Group 2 - The analyst has over 20 years of experience in quantitative research, financial modeling, and risk management, focusing on equity valuation and market trends [1] - The analyst's approach combines rigorous risk management with a long-term perspective on value creation, emphasizing macroeconomic trends and corporate earnings [1]