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KeyBanc downgrades Fortinet to 'sector weight' amid margin growth concerns

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KeyBanc downgrades Fortinet to 'sector weight' amid margin growth concerns

KeyBanc analyst Rob Owens downgraded Fortinet Inc. to "sector weight" from "overweight" as the company's shares approach his most recent price target of $55 and concerns over the company's future margin expansion grow.

Following several quarters of reiterated long-term targets calling for 150 to 200 basis points of annual operating margin expansion, the company's target appears to have become "more of a suggestion," the analyst wrote.

Long-term targets introduced at the company's recent analyst day excluded operating margin expectations, and management said the previously established outlook is now contingent on topline growth, Owens said.

Owens made no change to his price target of $55 and his EPS predictions.