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On Wednesday, BTIG analyst Gray Powell confirmed a Neutral rating for Palo Alto Networks (NASDAQ:PANW) shares, keeping the same price target. According to InvestingPro data, the cybersecurity giant, currently valued at $128.77 billion, trades at a relatively high P/E multiple of 100.76x, reflecting its premium positioning in the software industry. Powell’s assessment followed Palo Alto Networks’ release of its third fiscal quarter 2025 results, which showed next-generation security (NGS) annual recurring revenue (ARR) at $5,090 million, marking a 34% year-over-year increase. This figure slightly exceeded BTIG’s estimate of $5,065 million and was marginally ahead of the consensus estimate of $5,058 million. The company maintains strong financial health, earning a GREAT rating from InvestingPro, with revenue growing at 13.86% over the last twelve months.
Palo Alto Networks reported FQ3 revenue of $2,289 million, a 15% increase from the previous year, aligning with BTIG’s model and slightly surpassing the street’s expectations due to higher product revenue and lower-than-anticipated subscription and support revenue. The company’s management sustained its full-year 2025 NGS guidance while modestly raising its revenue forecast by $15 million, or 0.2%.
Powell noted the positive aspects of the report, including growth in Prisma SASE, driven by the company’s relatively new browser module, and strong adoption of XSIAM. However, the analyst expressed a desire for a more significant increase in NGS ARR net additions and pointed out that the street’s estimates for FY26 NGS ARR at $6,933 million, representing a 25% year-over-year growth, might be overly optimistic.
The analyst also mentioned some confusion around the softness in subscription and support revenue, which was unexpected. Despite these concerns, only minor adjustments were made to BTIG’s FY26 forecasts for Palo Alto Networks. The overall tone of the report was considered acceptable, with the analyst concluding the assessment by reiterating a Neutral stance on the company’s stock. The broader analyst consensus remains bullish at 1.87 (Buy), with 13 additional key insights available on InvestingPro, including detailed valuation metrics and growth projections in the comprehensive Pro Research Report.
In other recent news, Palo Alto Networks reported a strong third-quarter performance, with revenues reaching $2.29 billion, slightly above expectations and marking a 15% year-over-year increase. The company’s non-GAAP earnings per share came in at $0.80, surpassing the consensus estimate of $0.77. Goldman Sachs has raised its price target for Palo Alto Networks to $231, maintaining a Buy rating and expressing optimism about the company’s strategic positioning in the cybersecurity sector. Conversely, Guggenheim reiterated a Sell rating with a $130 price target, citing concerns over a decline in Total (EPA:TTEF) New Annual Recurring Revenue for the seventh consecutive quarter.
JPMorgan adjusted its price target to $221 while keeping an Overweight rating, noting better-than-expected operating profitability despite weaker growth in net new annual recurring revenue. Jefferies maintained a Buy rating with a $225 target, highlighting the company’s growth in Remaining Performance Obligations and product revenue. The recent acquisition of Protect AI and the introduction of Prisma AIRS demonstrate Palo Alto Networks’ continued investment in artificial intelligence security. The company’s strategic moves, including packaging products at discounts and leveraging AI, are seen as efforts to maintain its competitive edge. Despite mixed opinions from analysts, Palo Alto Networks remains a focal point in the cybersecurity industry due to its financial performance and strategic initiatives.
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