China Directs Firms to Halt Purchases of Foreign Cybersecurity Products Including Fortinet
China has ordered domestic companies to cease purchases of foreign cybersecurity products, including those from Fortinet, leading to a decline in Fortinet's stock price. Analysts expressed surprise at the directive, given Fortinet's limited engagement in China and its strong financial performance, while the company continues to develop new solutions despite facing a critical security vulnerability.
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Fortinet's stock declined after reports that China instructed domestic companies to stop purchasing cybersecurity products from several foreign providers, including Fortinet. The stock is currently priced at $76.39, below its 52-week high of $114.82.
Bernstein SocGen Group maintained a 'Market Perform' rating with a target price of $76.00. Analysts' consensus rating is 2.74, with target prices ranging from $70 to $120. The announcement surprised analysts, as many of the mentioned firms have limited engagement in China, including Fortinet with gross margins of 80.87% and a revenue growth of 14.78% over the past year.
Fortinet also announced several developments, including a 'Secure AI Data Center' solution in collaboration with Arista Networks and integration of its FortiGate VM with NVIDIA's BlueField-3 DPUs. Additionally, Fortinet faced the disclosure of a critical security vulnerability in its FortiWeb product.
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