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We recently published a list of 5 Stocks That Analysts Are Bearish On. In this article, we are going to take a look at where Fortinet, Inc. (NASDAQ:FTNT) stands against other stocks that analysts are bearish on.
The S&P 500 is up 0.19% while the Dow index has surged up 0.31%. As the broader market booms, there are a few stocks that are lagging the market. Some of these stocks have a bearish outlook and the analysts are adjusting their ratings accordingly.
While the US economy seems comfortably on the path of recovery, certain sectors have more risks associated with them. In other cases, stocks receive a downgrade when they have already run up considerably and analysts do not see more upside despite better earnings and macroeconomic environment. For investors, it is vital to understand why stocks receive a downgrade so they can plan to shift their investments accordingly.
We looked at 5 stocks that analysts are bearish on. To come up with the list of 5 stocks that analysts are bearish on, we looked at stocks that recently received a downgrade and have a market cap of at least $1 billion.
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Fortinet, Inc. (NASDAQ:FTNT)
Fortinet, Inc. (NASDAQ:FTNT) is a cybersecurity company that is unlikely to lose relevance at a time when cyber attacks are becoming a norm. However, cybersecurity spending is suffering because of the way AI and automation are helping people make their systems more secure.
The fundamental problem with Fortinet (NASDAQ:FTNT) is that a significant customer base of the company will reach the end of support by the next year. Analysts believe that this close to expiry, companies depict a certain growth which is lacking at Fortinet. Moreover, the stock ran up over 80% in a matter of 5 months which means whatever limited growth prospects the stock has at this point are most probably priced in.
All’s not lost for investors though as Piper Sandler upgraded the stock to Overweight just last week. The firm’s analysts believe that despite a surge in AI spending, cybersecurity is still a top priority for IT companies, and spending intentions in the sector have improved.
Fortinet, Inc. (NASDAQ:FTNT) is not on our latest list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held FTNT at the end of the third quarter which was 42 in the previous quarter.
Overall, FTNT ranks 1st on our list of stocks that analysts are bearish on. While we acknowledge the potential of FTNT as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is as promising as FTNT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.