Palo Alto Networks stock falls 5% amid CyberArk acquisition talks

Investing.com - Palo Alto Networks (NASDAQ:PANW), a prominent player in the software industry with a market capitalization of $122 billion, saw its stock fall 5% on Wednesday following reports that the cybersecurity company is in discussions to acquire CyberArk (NASDAQ:CYBR).

The Wall Street Journal reported that Palo Alto Networks is in active talks to acquire CyberArk at a price potentially exceeding the target company’s $20 billion market value. CyberArk shares rose 13% on the news. According to InvestingPro data, Palo Alto Networks operates with moderate debt levels and strong cash flows, potentially supporting such a significant acquisition.

Bernstein SocGen Group maintained its Outperform rating on Palo Alto Networks with a price target of $225.00 despite the market reaction. InvestingPro analysis reveals the company’s solid financial health score of GOOD, with revenue growing at ~14% year-over-year. Discover 12 more exclusive ProTips and comprehensive valuation metrics with InvestingPro.

The potential CyberArk acquisition would represent approximately five times the combined value of all Palo Alto Networks’ acquisitions over the past 15 years, according to Bernstein SocGen Group.

The negative market response contrasts with positive investor reaction to recent reports that Palo Alto Networks might bid for SentinelOne (NYSE:S), suggesting investors may prefer smaller acquisitions with lower valuations or operational risk.

In other recent news, Palo Alto Networks has completed its acquisition of Protect AI, a company focused on securing artificial intelligence applications, aiming to enhance its Prisma AIRS platform. Additionally, there are rumors that Palo Alto Networks is considering acquiring Cyberark Software (ETR:SOWGn) for over $20 billion, according to a report by The Wall Street Journal and comments from TD Cowen analysts. The cybersecurity sector, including Palo Alto Networks, has shown resilience despite some regional challenges, as noted in a Stifel survey of value-added resellers. The survey highlighted stronger performance for Palo Alto Networks alongside other companies like Zscaler (NASDAQ:ZS) and Cloudflare (NYSE:NET).

In terms of stock ratings, Stifel has maintained its buy rating for Palo Alto Networks with a price target of $225. However, the firm revised its fiscal year 2026 revenue growth estimate to 12% year-over-year, slightly below the consensus estimate. Goldman Sachs also reiterated its buy rating, with a price target of $231, citing the potential for Palo Alto Networks to meet or exceed expectations in next-generation security annual recurring revenue. This metric is considered a significant indicator of the company’s platform success. These developments reflect ongoing interest and activity surrounding Palo Alto Networks within the cybersecurity industry.

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