Baird Just Downgraded Fortinet, But It Might Not Be For Why You'd Think

In a report published Wednesday, Baird analyst Jayson Noland downgraded the rating on

to Neutral, while raising the price target to $46. The upside/downside for the stock appears more balanced at present and investors could trim their position on valuation strength. The analyst expects the company's fundamentals to continue to be strong. "Fortinet has successfully ramped its go-to-market efforts in large enterprise. The company has a clear advantage in applications requiring high throughput (e.g., HFT) which is a function of custom silicon versus a competitive landscape reliant on merchant silicon," Noland said. Fortinet has also been successful in its recent attempts to diverge in the U.S., with the Enterprise business recording 70 percent year-on-year growth in the last quarter. However, the analyst also reported that regional and international resellers have said that they prefer

to Fortinet in terms of a long-term strategic partner. "The company is well over halfway through its NP6 refresh cycle and about halfway through its S&M investment cycle per management. Fortinet is preparing to refresh its content processor (CP9) in the 2H'15 but it's unlikely to be a significant catalyst in our opinion," Noland added.