Fortinet FTNT is gaining traction with its push to converge firewall and secure access service edge (SASE) technologies, positioning the stock for upside. At its SASE Summit 2026, highlighted on Oct. 8, the company outlined how its Unified SASE platform is evolving to secure AI applications and autonomous agents alongside human users.
Fortinet is addressing sovereignty demands through FortiSASE Outpost, which extends inspection and enforcement to on-premises and colocation sites under centralized cloud management, and FortiSASE Sovereign, a private SASE model that customers or service providers can run on their infrastructure.
This builds on the FortiGate 1200G series launched with FortiSASE Outpost in July, which combines ASIC-powered local enforcement with cloud-delivered security. The strategy is showing up in results. In second-quarter 2026, the combined SASE Firewall business, spanning Secure Networking and Unified SASE, grew 34% to more than $2 billion. Unified SASE billings rose 35%, while FortiSASE billings more than doubled. Billings jumped 33% year over year to $2.37 billion, and revenues climbed 26% to $2.05 billion, exceeding the high end of guidance.
Fundamentals reinforce the outlook. Product revenues surged 52% to $773 million, with management expecting attached services to boost service revenue growth in the second half. Meanwhile, the non-GAAP operating margin hit a second-quarter record of 38%.
Backed by this momentum, Fortinet raised its 2026 outlook and now expects revenues of $8.02-$8.18 billion, implying 19% growth, billings of $9.35-$9.55 billion and service revenues of $5.18-$5.22 billion. Non-GAAP operating margin is projected at 35-37%, with non-GAAP EPS of $3.41-$3.47. For the third quarter, it expects revenues of $2.01-$2.10 billion, billings of $2.25-$2.35 billion and non-GAAP EPS of 83-87 cents.
With SASE emerging as a growth engine and guidance pointing to sustained billings strength, Fortinet appears well placed to extend its momentum, paving the way for the stock to reach new highs.
How Fortinet Stacks Up Against PANW and ZS in SASE
Fortinet faces competition in SASE from Palo Alto Networks PANW and Zscaler ZS. Palo Alto Networks’ Next-Generation Security ARR, which includes SASE, grew 63% to $9.10 billion in fiscal fourth-quarter 2026, while SASE competitive displacements totaled about $450 million for the fiscal year.
Palo Alto Networks expects fiscal 2027 NGS ARR of $11.08-$11.18 billion. Zscaler, a cloud-native zero-trust provider, grew ARR 25% to $3.77 billion in the same quarter and ended with more than 950 Zero Trust Everywhere enterprises. Zscaler projects fiscal 2027 ARR of $4.40-$4.43 billion. Unlike Zscaler’s cloud-delivered approach, Fortinet offers on-premises, hybrid and sovereign SASE deployments.
FTNT’s Share Price Performance, Valuation & Estimates
Fortinet shares have gained 116% in the year-to-date period, outperforming the Zacks Security industry and the broader Computer and Technology sector’s growth of 81.8% and 15.8%, respectively.
FTNT’s Price Performance
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From a valuation standpoint, FTNT appears overvalued, trading at a forward 12-month price-to-earnings ratio of 45.52, higher than the sector's average of 19.44. The company carries a Value Score of F.
FTNT’s Valuation
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The Zacks Consensus Estimate for Fortinet’s earnings is pegged at $3.45 per share for 2026, which implies year-over-year growth of 25%.
Fortinet, Inc. Price and Consensus
Fortinet, Inc. price-consensus-chart | Fortinet, Inc. Quote
Fortinet currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).