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On Wednesday, UBS analyst Roger Boyd maintained a Neutral rating on Palo Alto Networks (NASDAQ:PANW) with a consistent price target of $200.00. Boyd’s assessment followed the company’s third-quarter results, which he described as mixed. With a current market capitalization of $128.77 billion and trading at $194.48, InvestingPro analysis indicates the stock is trading above its Fair Value. Palo Alto Networks reported Annual Recurring Revenue (ARR) that was $10 million above the upper range of their guidance and revenues that were near the top end as well. However, the Remaining Performance Obligations (RPO) growth was at 19%, which Boyd noted as close to the lower end of the company’s guidance. Furthermore, the Free Cash Flow (FCF) for the quarter fell short of market expectations.
Despite these mixed results, Boyd expressed optimism based on several positive indicators. According to InvestingPro data, the company maintains strong financial health with a "GREAT" overall score, supported by revenue growth of 13.86% in the last twelve months. Boyd highlighted the company’s slight pause before resuming normal business operations and was encouraged by the progress in XSIAM, an acceleration in product revenue, and the strength in platform deals, which increased to approximately 90 in the quarter from about 75 in the previous quarter.
Looking ahead, Boyd pointed out that Palo Alto Networks’ full-year guidance suggests a significant increase in fourth-quarter FCF, projecting a 70% quarter-over-quarter rise compared to a 6% decrease observed in the last two fiscal years. The company also noted that 80% of collections are anticipated to come from deals that have already been booked.
However, Boyd remained cautious, citing a slowdown in booking metrics and a 2 percentage point deceleration in subscription revenue growth to 18%. The guidance for the fourth quarter is approximately 14-16% growth. He concluded that given these factors, the current valuation of Palo Alto Networks’ shares at 29 times the calendar year 2026 Enterprise Value/FCF for low to mid-teens growth seems appropriate.
In other recent news, Palo Alto Networks reported its third fiscal quarter earnings, showing a 15% increase in revenue to $2,289 million compared to the previous year. The company’s next-generation security annual recurring revenue (NGS ARR) saw a 34% year-over-year growth, reaching $5,090 million, slightly surpassing expectations. Jefferies continues to maintain a Buy rating with a price target of $225, citing strong financial indicators and a robust pipeline. Conversely, Guggenheim reiterated a Sell rating with a $130 price target, highlighting a decline in total new annual recurring revenue for the seventh consecutive quarter. Evercore ISI raised its price target to $220, noting the company’s platform strength despite mixed earnings results. BTIG maintained a Neutral rating, observing some confusion around subscription and support revenue softness. JPMorgan adjusted its price target slightly downward to $221, while maintaining an Overweight rating, pointing out better-than-expected operating profitability. Palo Alto Networks also announced the acquisition of Protect AI, expected to close in the first quarter of 2026, as part of its ongoing investment in AI security.
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