Software company Fortinet lowered its forecast for fiscal-year service revenue and the stock dropped sharply in premarket trading Thursday.
Fortinet (ticker: FTNT) said it expects adjusted earnings for the fiscal year of $1.01 to $1.06 a share, vs. analysts’ estimates of $1.03. Revenue was predicted at $4.35 billion to $4.4 billion, vs. estimates of $4.39 billion. But the company lowered its forecast for service revenue to $2.62 billion to $2.67 billion, down from previous expectations of $2.64billion to $2.7 billion.
The stock fell 8.3% in premarket trading to $57.66.
Fortinet reported second-quarter adjusted earnings late Wednesday of 24 cents a share, higher than 19 cents a share a year earlier and above Wall Street forecasts of 22 cents. Revenue rose 29% to $1.03 billion.
Analyst Dan Bergstrom at RBC Capital Markets said Fortinet’s forecast “remains mindful of the macro and set-up into year-end.” Bergstrom rates the stock at Sector Perform, with a price target of $69.
Bergstrom noted that the largest change in Fortinet’s service revenue guidance was the “removal of service revenue from Russia that is already sitting in deferred revenue” and was not previously removed from guidance when the company stopped doing business in Russia in early March.
“Beyond this, there remains some impact from linearity with customers receiving product later in the quarter and some deferral around turning service contracts on,” the analyst added.
Write to Joe Woelfel at [email protected]
Credit: www.marketwatch.com /