Fortinet Stock (FTNT) Tumbles After Morgan Stanley Flips Bearish - Here’s Why It Matters

Wall Street's mood swings just hit cybersecurity hard.

Morgan Stanley pulls the rug on Fortinet—downgrades stock amid growth concerns. The move sends FTNT shares spiraling downward as analysts question the company's competitive edge in an increasingly crowded security landscape.

Institutional skepticism meets market reality. When a major player like Morgan Stanley turns bearish, traders listen—and panic often follows. The downgrade reflects broader worries about enterprise spending and margin pressures.

Another day, another analyst flip-flop that costs retail investors real money while the big funds already positioned themselves accordingly. Classic Wall Street foresight—always just slightly ahead of everyone else's losses.

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It is worth noting that Fortinet stock plunged following its Q2 results despite beating earnings expectations, as the company’s third-quarter revenue guidance lagged the Street’s estimates, triggering concerns about future growth. 

In particular, investors were concerned about Fortinet’s firewall refresh cycle, as the company indicated that it was 40% to 50% complete, suggesting that this growth driver is about to fade. Management had earlier highlighted a $400 million to $450 million refresh opportunity in firewall products.

Morgan Stanley Downgrades Fortinet Stock to Sell

Marshall contends that Wall Street’s growth estimates for Fortinet for the next year need to be reduced further, which could weigh on the stock. The 4-star analyst added that while she sees growth opportunities in secure access service edge (SASE) and SecOps offerings, the dismal Core firewall refresh impacts the company’s growth story over the near term.

The analyst believes that the Street’s Fiscal 2026 and 2027 estimates WOULD come under pressure when Fortinet’s firewall refresh does not play out as expected, triggering a selloff in the stock. She expects the Street to build in high single-digit growth estimates, down from double-digit growth expectations, which will pressure valuation back to high teens on an enterprise value/free cash flow (EV/FCF) basis.

While Marshall currently finds FTNT’s risk-reward profile unfavorable, she sees the possibility of returning to the stock, given the continued traction with U.S. sales expansion and the upsell of additional SASE/SecOps products in the past few quarters. For now, the analyst expects Fortinet to underperform relative to its peers.

Is FTNT a Good Stock to Buy?

Even prior to Morgan Stanley’s downgrade, the consensus rating on Fortinet was a Hold based on six Buys, 28 Holds, and one Sell recommendation. The average FTNT stock price target of $87.75 indicates 11.5% upside potential.