Big losses from Fortinet, Rapid7 drag security stocks into the red
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Network and cybersecurity companies had a rough go of it on Thursday as disappointing earnings reports and outlooks from the likes of Fortinet (NASDAQ:FTNT) and Rapid7 (NASDAQ:RPD) dragged down investor sentiment on the sector across Wall Street.
Fortinet (FTNT) fell by almost 14% as it gave a fourth-quarter billings forecast of between $1.66B and $1.72B, which fell short of estimates of $1.74B. The company also said it expects revenue for the quarter to be between $1.275B and $1.315B, and gave a third-quarter report that surpassed Wall Street analysts' forecasts.
Rapid7 (RPD) had it even worse than Fortinet (RPD), as its shares fell nearly 23% after the cloud-based developer of network-security risk assessment technology cut its annual recurring revenue forecast. Truist Securities analyst Joel Fishbein cut his rating on Rapid7 (RPD) to hold from buy, and slashed his price target on the company's stock to $40 a share from $80. Fishbein said Rapid7 (RPD) was dealing with execution problems that might take months to repair.
With Fortinet (FTNT) and Rapid7 (RPD) leading the way, other security software and technology companies also headed south as trading progressed.
Losses came from Palo Alto Networks (NASDAQ:PANW), which dropped by 7.5%, CrowdStrike Holdings (NASDAQ:CRWD), down by a 4.4%, and Zscaler (ZS), which ended the day off by 5%.
One outlier was network monitoring and security company Datadog (DDOG), which rose more than 4% after reporting it raised its earnings and revenue outlook for its fiscal year.