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Investing.com - UBS lowered its price target on Palo Alto Networks (NASDAQ:PANW) to $220.00 from $230.00 while maintaining a Neutral rating on the cybersecurity company. The new target remains below the analyst consensus high target of $255, according to InvestingPro data, which shows the stock currently trading at a P/E ratio of 125.7 and appears slightly overvalued based on Fair Value estimates.
The price target reduction follows Palo Alto Networks’ first-quarter results, which UBS described as "generally positive" with strong annual recurring revenue (ARR), remaining performance obligations (RPO), and free cash flow (FCF) performances.
These positive metrics were offset by modestly weaker second-quarter services revenue growth of 14.3% year-over-year and what UBS characterized as a "mixed adjustment" to the fiscal 2026 outlook.
UBS noted that Palo Alto Networks’ revenue outlook was raised in line with the first-quarter beat, while ARR guidance remained unchanged. The firm expects service revenue growth could potentially reaccelerate in the second half of the fiscal year after stabilizing in the second quarter.
The proposed acquisition of Chronosphere adds another dimension to Palo Alto Networks’ growth outlook, with $160 million of ARR growing over 100% year-over-year, which combined with CyberArk and new organic features resulted in a $5 billion increase to the company’s fiscal 2030 next-generation security ARR target, now set at $20 billion.
In other recent news, Palo Alto Networks reported its first-quarter earnings for fiscal year 2026, surpassing analyst expectations with earnings per share of $0.93, compared to a forecast of $0.89. The company’s revenue also exceeded projections, reaching $2.5 billion against the expected $2.46 billion. BTIG responded to these results by raising its price target to $248, maintaining a Buy rating, noting the revenue beat was driven by better-than-expected product revenue. Cantor Fitzgerald reiterated its Overweight rating with a $250 price target, highlighting the company’s strong performance across multiple metrics, including revenue and earnings per share.
TD Cowen maintained its Buy rating with a $255 price target, emphasizing the solid performance with Next-Generation Security Annual Recurring Revenue growing 29% year-over-year. Guggenheim, however, maintained a Sell rating and a $135 price target, noting that the company’s results were largely in line with or slightly better than consensus expectations. Despite the mixed ratings, Palo Alto Networks provided guidance for the second quarter and full fiscal year 2026 that aligned with market expectations. The company’s Remaining Performance Obligations increased by 24%, exceeding analyst estimates. Overall, these developments reflect a range of perspectives from analysts on Palo Alto Networks’ recent financial performance.
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