By Sam Boughedda
Morgan Stanley raised its price target on Palo Alto Networks (NASDAQ:PANW) to $240 from $220, maintaining an Overweight rating in a note Wednesday, telling investors they see plenty of room for the stock to move higher.
Looking ahead to PANW's earnings release, Morgan Stanley analysts told investors that their checks indicate healthy demand and large deal activity as more customers buy into the broader PANW platform.
Last month, Morgan Stanley reiterated PANW as its top pick as they believe the company is "best positioned to deliver durable 20%+ topline growth during tougher macro given its broader platform and ability to drive vendor consolidation within a large installed base."
However, since then, the firm's checks have been "surprisingly more positive," said the analysts, who added that it indicates a "notable uptick in large deal activity towards the end of January after a generally modest budget flush in December."
"While the longer sales cycles and increased budget scrutiny are here to stay, overall pipeline and demand continues to grow, but visibility into late-Q2/2H remains less certain given the macro. As such, we still expect a BEAT and REITERATE next week," the analysts wrote.
"We expect PANW to deliver its third consecutive quarter of positive GAAP EPS, putting the company on track for S&P 500 inclusion by the April quarter."