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On Wednesday, Piper Sandler maintained a Neutral rating on Palo Alto Networks stock (NASDAQ:PANW), currently trading at $194.48 with a market capitalization of $128.77 billion, maintaining a steady price target of $200.00. According to InvestingPro analysis, the stock is currently trading above its Fair Value, with multiple indicators suggesting high valuation multiples. The firm’s analysis acknowledged Palo Alto Networks’ third-quarter performance as solid, despite a challenging macroeconomic climate. The quarter was marked by a notable product growth, approximately doubling quarter-over-quarter, and sustained progress in the company’s strategic shift towards a platform-based model. InvestingPro data shows the company achieved 13.86% revenue growth in the last twelve months, maintaining its position as a prominent player in the software industry. Get access to 13 more exclusive InvestingPro Tips and comprehensive analysis through the Pro Research Report. Piper Sandler highlighted Palo Alto Networks’ advancements in Next-Generation Security (NGS) pillars, including XSIAM and software firewalls.
The report noted that while the third-quarter results were reasonable, they did not present significant upside or prompt an increase in key metrics such as Remaining Performance Obligations (RPO) and Next-Generation Security Annual Recurring Revenue (NGS ARR). This could lead to discussions as the calculated bookings growth decelerates to a single-digit range. Piper Sandler pointed out that with forward expectations already adjusted and the stock valuation considered full at current levels, the outlook for Palo Alto Networks shares is balanced.
Despite the volatility in April, Palo Alto Networks demonstrated a robust quarter, with key business drivers maintaining strong momentum. The firm’s commentary suggested that the stock is fairly valued, with a revenue multiple of approximately 12 times the calendar year 2026 estimates (CY’26E) and a free cash flow (FCF) multiple of around 33 times CY’26E. This valuation assessment aligns with InvestingPro’s analysis, which highlights the company’s GREAT financial health score of 3.14 out of 5, though noting its high earnings and valuation multiples. This valuation underpins Piper Sandler’s decision to keep their Neutral stance on the stock.
In other recent news, Palo Alto Networks reported its third-quarter fiscal results, which showed a $12 million revenue surplus, driven by a 16% year-over-year increase in product sales. Despite a minor shortfall in subscription revenues, key performance indicators such as Next-Generation Security (NGS) Annual Recurring Revenue (ARR), billings, and profit margins met projections. The company has also slightly uplifted its fiscal year 2025 adjusted free cash flow (FCF) outlook. Analysts from KeyBanc maintained an Overweight rating with a $220 price target, while Evercore ISI raised its target to $220, citing platform strength and new product metrics. UBS and BTIG both maintained a Neutral rating, noting mixed results but highlighting positive indicators such as growth in platform deals and NGS ARR. Jefferies reiterated a Buy rating with a $225 target, emphasizing the company’s robust pipeline and positive free cash flow outlook. Management expressed confidence in the stabilization of the macro environment and projected a strong trajectory for free cash flow, aiming for $4.5 billion by fiscal year 2027.
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