Palo Alto Networks stock target raised to $230 at Needham

On Friday, Needham analysts increased their price target on shares of Palo Alto Networks (NASDAQ:PANW) to $230 from $225, while reiterating a Buy rating on the stock. Currently trading at $191.07 and near its 52-week high of $207.24, InvestingPro analysis suggests the stock is trading above its Fair Value. This adjustment followed the company's fiscal second-quarter results, which surpassed consensus estimates. Additionally, Palo Alto Networks provided third-quarter and full-year guidance that met or exceeded Wall Street's forecasts.

Palo Alto Networks reported a 26% year-over-year growth in Remaining Performance Obligations (RPO), reaching $13 billion, aligning with the high end of their projected range of $12.9 to $13.0 billion. With a robust gross profit margin of 73.86% and an impressive financial health score rated as "GREAT" by InvestingPro, the company continues to demonstrate strong operational efficiency. This growth was attributed to the acceleration of large platformization deals. Notably, the company secured their largest deals ever in the EMEA and APAC regions during the second quarter, each exceeding $50 million.

The firm observed a significant increase in platformized customers, totaling 1,150, with 75 new additions in the second quarter compared to 45 in the same period last year. Deals over $5 million saw a year-over-year increase of 25%, while those exceeding $10 million rose by 52%. These figures underscore the expanding scale and efficiency of Palo Alto Networks' platform deals.

Palo Alto Networks has also extended its free cash flow (FCF) margin targets, now aiming for 37-38% or higher through FY27. This confidence is based on several factors, including better visibility into deferred payments, operational efficiencies, and the impact of AI. The company's Next-Generation Security (NGS) Annual Recurring Revenue (ARR) grew by 37% year-over-year to $4.78 billion, driven by advanced subscriptions, strong performance in Secure Access Service Edge (SASE) bookings, which were up 50% year-over-year, and growth in Cortex/XSIAM products. With revenue growth of 13.86% and a market capitalization of $125.66 billion, InvestingPro subscribers can access over 30 additional key metrics and insights about Palo Alto Networks in the comprehensive Pro Research Report.

In other recent news, Palo Alto Networks has been the focus of several analyst reports following its latest earnings release. Bernstein raised the company's stock target to $229, citing the firm's successful platformization strategy and product growth. The company reported growth in its platformization strategy, surpassing NGS ARR guidance by 120 basis points in its FQ2 2025.

William Blair maintained an Outperform rating on Palo Alto Networks, despite concerns about slowing net new Annual Recurring Revenue (ARR) growth in Next-Gen Security (NGS). The firm expressed optimism about potential growth drivers, such as artificial intelligence (AI) and Extended Security Incident and Management (XSIAM).

Cantor Fitzgerald reaffirmed its Overweight rating on Palo Alto Networks with a consistent price target of $223. The firm noted the company's successful quarter, surpassing FactSet consensus estimates for revenue, Remaining Performance Obligations (RPO), Next-Generation Annual Recurring Revenue (Next-Gen ARR), and Earnings Per Share (EPS).

Guggenheim reiterated its Sell rating on Palo Alto Networks, expressing concerns about the company's cash flow and new business growth. Despite these concerns, the company maintained its guidance for NGS ARR and RPO for the upcoming quarters.

Lastly, JMP Securities increased its price target for Palo Alto Networks to $212, maintaining a Market Outperform rating. The firm highlighted the company's strong earnings per share and revenue results, which met or surpassed analyst forecasts.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.