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Investing.com -- Deutsche Bank upgraded Palo Alto Networks to Buy from Hold and raised its price target to $220, saying investor concerns over its planned CyberArk acquisition are overstated and that the cybersecurity firm is set for solid quarterly results.
“With the stock underperforming broader cyber since credible speculation of the acquisition, we think investor concerns are overblown,” analyst Brad Zelnick said.
The brokerage said Palo Alto shares have lagged the broader sector this year, falling 15% relative to peers and 11% since reports of the CyberArk deal, despite the company’s faster organic growth compared to rival Fortinet.
Deutsche Bank pointed to its survey of cybersecurity partners, which suggested stronger fiscal fourth-quarter demand, helped by broad product momentum and gains for Prisma Cloud and XSIAM from competitive disruption at Splunk and Wiz.
It also expects another robust performance from software firewalls, potentially lifting product revenue above Wall Street forecasts.
The bank said Palo Alto’s leadership, execution and deal synergies position it well for growth, noting the stock’s valuation premium to Fortinet is modest given the faster expansion rate.
“We upgrade shares of Palo Alto Networks to a Buy rating and raise our DCF-derived TP to $220 given our thoughts on the health of the business, quality of its leadership, and forward prospects for the announced acquisition of CyberArk”