Truist Adjusts SAIL Stock FCF Estimates, Sees Solid Earnings

On Monday, Truist Securities provided insights on the upcoming off-cycle earnings for Infrastructure & Security Software (ETR:SOWGn) stocks. Analyst Joel P. Fishbein Jr. expressed confidence that the companies under their coverage, which includes Palo Alto Networks (NASDAQ:PANW), would report strong quarterly results and offer conservative guidance, potentially leading to a beat-and-raise pattern throughout 2025. The analyst highlighted customer and partner discussions that suggest demand remains in line, despite some caution regarding U.S. Federal spending.

Fishbein adjusted the free cash flow (FCF) estimates for SAIL (NYSE:SAIL), indicating a strategic move ahead of the earnings announcements. He emphasized the importance of high-quality names, particularly those with a Buy rating such as Elastic (NYSE:ESTC), Snowflake (NYSE:SNOW), SailPoint Technologies Holdings (NYSE:NYSE:SAIL), and Zscaler (NASDAQ:ZS), due to the high cost of potential execution missteps. PANW’s strong market position is reflected in its substantial $127.8B market capitalization and healthy levered free cash flow of $2.9B. InvestingPro analysis reveals 13 additional key insights about PANW’s market position and growth potential.

The analyst noted that the off-calendar companies are likely to follow the trend seen in March-quarter-end reports, delivering solid results but with conservative guidance for the second half of 2025. This caution stems from a modest macro overhang observed since April, with channel partner conversations revealing possible deal slippage and longer deal cycles, which could reduce visibility moving forward.

Regarding federal spending, ServiceNow (NYSE:NOW) and Tenable Holdings (NASDAQ:TENB) have already incorporated extra caution into their outlooks. Fishbein pointed out that while civilian agencies have seen more significant slowdowns, the Department of Defense (DoD) has been less impacted. Nevertheless, he anticipates that security spending will remain robust compared to other IT budget areas.

The analyst underscored the critical nature of identity security for both humans and machines, cloud security, Zero Trust frameworks, and data security and governance as key priorities for enterprise buyers. He also mentioned the increasing complexity of cyberattacks driven by AI, which exposes organizations to new threats and an expanding threat landscape. In light of recent warnings from the Cybersecurity and Infrastructure Security Agency (CISA) about cyber actors targeting U.S. critical infrastructure sectors, Fishbein believes that the necessity for continued security spending will persist. With PANW’s next earnings report due on May 20, 2025, investors can access comprehensive analysis and detailed metrics through InvestingPro’s exclusive Research Report, which provides deep-dive analysis of this cybersecurity leader’s performance and prospects.

In other recent news, Palo Alto Networks has been the subject of several positive analyst evaluations. JPMorgan raised its price target for the company to $225, maintaining an Overweight rating due to anticipated strong fiscal third-quarter results, driven by robust deal activity and strategic partnerships. Analysts at TD Cowen have also maintained a Buy rating with a $230 target, projecting that Palo Alto Networks’ third-quarter performance will align with the higher end of its guidance, expecting approximately 14.9% year-over-year growth. KeyBanc Capital Markets increased its price target to $220, citing the company’s potential growth in Next-Generation Security Annual Recurring Revenue and Free Cash Flow margins.

Stifel and Jefferies both reaffirmed their Buy ratings, with Stifel setting a target of $225 and Jefferies raising its target to the same amount from $215. Stifel’s analysis was based on feedback from cybersecurity Value-Added Resellers and System Integrators, noting a generally positive sentiment despite some inconsistencies in results. Jefferies highlighted Palo Alto Networks’ strong growth in Remaining Performance Obligations and Annual Recurring Revenue as key factors for the revised price target. The company’s progress toward its fiscal year 2025 target of 37-38% Free Cash Flow margin is also a focal point for investors and analysts. These developments reflect confidence in Palo Alto Networks’ ability to capitalize on expanding cybersecurity demands.

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