Palo Alto Networks stock rating reiterated at Buy by Stifel on solid results

Investing.com - Stifel maintained its Buy rating and $225.00 price target on Palo Alto Networks (NASDAQ:PANW) following the company’s first-quarter fiscal 2026 results, which showed modest outperformance across key metrics. The cybersecurity leader currently trades at a P/E ratio of 125.7, reflecting its premium valuation in the software industry.

The cybersecurity firm reported first-quarter revenue growth of 16% year-over-year, while remaining performance obligations (RPO) increased 24% and next-generation security annual recurring revenue (NGS-ARR) rose 29% compared to the same period last year, all slightly exceeding expectations. InvestingPro data shows PANW has maintained strong financial health with a 73.41% gross profit margin and total revenue of $9.22 billion over the last twelve months.

Palo Alto Networks reaffirmed its fiscal 2026 targets for RPO, ARR, and free cash flow margin, while modestly raising its revenue and profitability guidance for the year. The company reported double-digit growth across all geographic regions, with continued momentum in its platformization strategy and focus areas including SASE, XSIAM, AI, and software-firewalls. According to InvestingPro, analysts forecast EPS of $4.02 for FY2026, with the company maintaining a 5-year revenue CAGR of 22%.

The company announced a $3.35 billion acquisition of Chronosphere, a modern observability vendor with over $160 million in annual recurring revenue that serves AI and digital native organizations. This acquisition marks Palo Alto Networks’ expansion into the $32 billion observability market. With a debt-to-equity ratio of just 0.05 and an Altman Z-Score of 6.02, PANW has the financial strength to support this strategic acquisition.

Management confirmed its previously announced CyberArk acquisition remains on track to close in the third quarter of fiscal 2026, and expects to maintain an adjusted free cash flow margin of at least 37% in fiscal 2026 after both deals close, with projections of exceeding 40% by fiscal 2028 and reaching $20 billion in NGS ARR by fiscal 2030, up from its previous target of $15 billion. InvestingPro identifies PANW as a "prominent player in the Software industry" with over 10 additional ProTips available in the comprehensive Pro Research Report, offering deeper insights into this cybersecurity leader’s financial health and growth potential.

In other recent news, Palo Alto Networks reported fiscal first-quarter results that exceeded expectations, with revenue reaching $2.47 billion, slightly above the consensus estimate of $2.46 billion and reflecting a 16% year-over-year growth. The company’s non-GAAP earnings per share came in at $0.93, surpassing the consensus estimate of $0.89. Palo Alto Networks also announced a $3.4 billion acquisition of Chronosphere, which aims to strengthen its position in the observability market. Following these developments, several analyst firms adjusted their ratings and price targets for the company. BMO Capital reiterated an Outperform rating with a price target of $230. Piper Sandler raised its price target to $230 from $225, maintaining an Overweight rating. Cantor Fitzgerald reiterated an Overweight rating and set a price target of $250, citing the company’s strong quarterly performance. Bernstein increased its price target to $210, maintaining an Outperform rating, noting that Palo Alto Networks exceeded its revenue guidance by $4 million and its annual recurring revenue guide by $10 million. Citizens also reiterated a Market Outperform rating with a $250 price target, highlighting the company’s non-GAAP operating margin of 30.2%, which surpassed the expected 29.1%.

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