Cybersecurity Stocks Are Heating Up After Fortinet’s Blowout Quarter

On the May 11 episode of The Morning Filter podcast, Morningstar Chief US Market Strategist Dave Sekera recapped Fortinet’s FTNT latest results and discussed which cybersecurity stocks look attractive today. Here’s an excerpt from the episode.

Susan Dziubinski: Fortinet stock was up 32% last week. Morningstar held its fair value estimate on the stock after earnings at $108. What got the market so excited?

David Sekera: It’s finally nice to see these cybersecurity stocks we have been talking about for so long get the recognition in the marketplace for the type of valuations we think that these companies are worth. Now, Palo Alto PANW has been my more recent go-to pick in the cybersecurity space.

Fortinet has been a pick in the past. I looked it up, I think the Sept. 22 show last year of The Morning Filter, it was one of the picks for the week. As far as earnings go, very strong, 20% year-over-year top-line growth. Their new offerings are doing very well. Margin expansion of 160 basis points, getting up to 36%. They increased their guidance for 2026 revenue to $7.8 billion, up from $7.6 billion. As you noted, this was all in line with our model, so we maintained our $108 per share fair value.

Dziubinski: Fortinet’s good news sort of lifted all cybersecurity stocks last week. Of course, longtime viewers know that cybersecurity is a favorite industry of yours. Given what we saw, the runup in some of these stocks last week, give us an update on which ones you like best today after that runup.

Sekera: It depends on what you’re looking for as an investor. After the rally, Fortinet is now right at our fair value, so a 3-star-rated stock. Palo Alto also had a big rally after Fortinet reported. It’s now only at an 8% discount, but it’s still one of my preferred picks in this space. Palo Alto was invited into Anthropic’s Project Glasswing. I think that really shows how that approval and acknowledgment show that they do have a leadership position in the cybersecurity space, specifically in AI. Now, Zscaler ZS is probably the most undervalued of the stocks. It’s a 5-star-rated stock at a 50% discount. This would be one I’d say is probably most appropriate for higher-risk types of investors, but it is one that was also invited into that Project Glasswing. Okta OKTA, 16% discount, 4 stars. I think that’s also a higher-risk type of situation.

If we look at CrowdStrike CRWD and Cloudflare NET, both of those are pretty close to fair value, 3-star-rated stocks. The last one here is Check Point CHKP. That is a 5-star-rated stock at a 40% discount. I’d just caution investors on this one. They did have a miss last quarter. I think they’re going to have at least a quarter or two of better results to be able to regain their footing in the marketplace and get rid of some of that negative market sentiment that would be trading on that name.

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