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Investing.com - Bernstein SocGen Group lowered its price target on Palo Alto Networks (NASDAQ:PANW) to $204.00 from $225.00 on Wednesday, while maintaining an Outperform rating on the cybersecurity company’s stock. Currently trading at $170.93, PANW has seen its shares decline over 7% in the past week, according to InvestingPro data.
The price target reduction follows Palo Alto Networks’ recent announcement of its intention to acquire CyberArk in a cash and equity deal valued at approximately $25 billion, representing a $5 billion premium over CyberArk’s pre-deal value. The deal comes as PANW, with its $114 billion market cap and "GOOD" InvestingPro Financial Health score, operates with a moderate level of debt.
Bernstein SocGen noted that while investors initially reacted negatively to the acquisition news, with PANW’s market capitalization dropping by approximately $20 billion, the firm’s analysis suggests the market concerns may be "half-baked."
The research firm views the CyberArk acquisition positively, stating that the deal helps Palo Alto Networks enter the identity security space, which it describes as "an AI-winner cyber category," while closing "the remaining gap in their portfolio."
Bernstein SocGen believes cost synergies from the deal have "line of sight to cover the deal premium" and sees "synergistic revenue upside" as more likely than customer retention risks, though it acknowledges execution risks remain.
In other recent news, Palo Alto Networks has been actively engaged in discussions to acquire CyberArk, a leading identity platform provider, for a price potentially exceeding $20 billion. This potential acquisition has sparked mixed reactions among analysts. KeyBanc downgraded Palo Alto Networks from Overweight to Sector Weight, expressing concerns about strategic synergies between identity management and the company’s existing focus on network security. In contrast, Cantor Fitzgerald reiterated an Overweight rating on Palo Alto Networks, highlighting potential benefits from integrating CyberArk’s capabilities with Palo Alto’s AI security platform, Prisma AIRS. Meanwhile, TD Cowen analysts have issued positive comments regarding the rumored acquisition, suggesting optimism about the deal’s prospects. Furthermore, a recent survey by Stifel indicates that Palo Alto Networks continues to perform well in the resilient cybersecurity sector, alongside companies like Zscaler (NASDAQ:ZS) and Cloudflare (NYSE:NET). These developments reflect the dynamic landscape surrounding Palo Alto Networks as it navigates potential strategic shifts and market reactions.
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