Forgent Power Drops 10% After a 37% Post-Offering Sprint — Is the Data Center Darling Running on Hype or Real Demand?

Shares of Forgent Power Solutions (FPS) slid 10.1% to $58.03 on June 5, erasing much of a blistering rally that carried the stock from its $47.00 upsized offering price to a $65.88 intraday high in barely a week. The sell-off lands squarely in textbook profit-taking territory — but for a company sitting at the center of the AI-driven power infrastructure boom, the question is whether the pullback resets the entry point or exposes a valuation that got ahead of itself.

  • The Offering Flooded the Market With New Shares — and Insider Cash-Outs

Forgent priced an upsized public offering of Class A common stock at $47.00 per share , raising roughly $1.99 billion . The 35 million-share deal, including secondary sales from entities controlled by private-equity sponsor Neos Partners, increases the number of freely traded shares and dilutes — or shrinks — existing shareholders' slice of future earnings.

Form 4 filings show Neos entities sold 48.6 million Class A shares on June 1 , a clear signal that the company's largest backer is monetizing its position at scale.

  • A 103% Revenue Surge Fueled the Frenzy

Forgent reported fiscal Q3 revenue of $379 million, up 103% year-over-year.

Management raised full-year 2026 guidance to $1.35–$1.39 billion in revenue and $310–$320 million in adjusted EBITDA (a measure of operating profit before accounting deductions). Record Q3 bookings of $867 million and a backlog of $1.98 billion point to a book-to-bill ratio of 2.3× , meaning new orders are piling in far faster than they're being shipped — a strong demand signal for its custom-built data center and grid electrical equipment.

  • The Stock Still Trades at a Nosebleed Valuation

At a price-to-sales ratio of roughly 12.2×, Forgent sits well above its industrial-equipment peers . A discounted-cash-flow model pegs fair value near $59.64, suggesting the stock was essentially fully priced before today's drop . The average analyst price target is $57.20, with the Street's high at $63, and all nine covering analysts rate it a buy — which leaves little room for upside surprises at current levels.

  • Power Grid Bottlenecks Could Slow the Growth Story

Up to half of global AI data center projects now face delays or cancellations due to power grid constraints , a risk that could crimp the very demand driving Forgent's order boom. The next earnings report lands September 2 , and investors will scrutinize whether that massive backlog converts to cash or stalls in permitting limbo.