Fortinet’s Stock Price Heading Back Upward

After several days of losses following its latest financial report, the network security vendor is seeing renewed interest from investors.

Fortinet CEO Ken Xie

Shares in Fortinet are on the rise Wednesday, following several days of stock price losses after its latest quarterly financial report disappointed investors and analysts.

Fortinet’s stock price (ticker: FTNT) is up 2.7 percent to $50.85 as of this writing Wednesday morning.

[Related: Okta, Fortinet See Further Stock Price Declines]

Prior to the reversal, the network security vendor has seen declines in share value each day since last Thursday, when the company released a weaker-than-expected financial report.

At the current Fortinet stock price as of this writing, the company’s shares are 11.7 percent below its closing price of $57.59 Thursday.

It wasn’t immediately clear what may have prompted the rise in Fortinet’s stock price, though investors were also sending shares in other major cybersecurity industry players upward Wednesday morning. Zscaler’s stock price was up 1.6 percent to $174.11 a share, while Palo Alto Networks — a top Fortinet rival that took a hit to its stock price after the vendor’s report last week — was up 0.6 percent to $243.55 as of this writing.

The release Thursday of Fortinet’s results for the third quarter ended Sept. 30 showed a 16 percent gain in overall revenue from a year earlier. However, Fortinet also saw a drop in firewall sales, which led the company’s third-quarter revenue to fall short of the analyst consensus estimate.

Fortinet’s product revenue for Q3 declined 0.6 percent year over year to $465.9 million—marking the company’s first year-over-year decline in firewall sales since it went public in 2009. The company is encountering a “slowdown in secure networking market growth,” said Ken Xie, Fortinet’s co-founder, chairman and CEO, during the company’s quarterly call with analysts Thursday.

The company’s revenue outlook for the fourth quarter also came in below Wall Street expectations.

Amid the report Thursday, Fortinet said it will be shifting more of its focus to faster-growing areas, such as SASE (secure access service edge) and security operations tools. SASE now represents 20 percent of Fortinet’s business while SecOps tools now make up 10 percent.

“In response to the slowdown in [the] secure networking market, we are shifting our marketing and sales team’s focus towards the faster-growing security operations and SASE market over the next few quarters,” Xie said during the call with analysts.

Within the SASE market, “our industry leadership in both firewall and SD-WAN — the two largest components of SASE — provide us with a significant competitive advantage,” he said.

In Fortinet’s third-quarter results, service revenue grew nearly 28 percent year over year to reach $868.7 million, the company reported.