Palo Alto Networks Inc. shares are basking in the ultimate relief rally Monday after the company’s Friday night earnings scare proved a fakeout. TipRanks’ analyst ranking service pinpoints Wall Street’s best-performing stocks, including Nvidia and Palo Alto. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.
A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return. The monthly returns are then compounded to arrive at the annual return. Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations. Zacks Ranks stocks can, and often do, change throughout the month.
In a report released on August 30, Westpark Capital also initiated coverage with a Buy rating on the stock with a $340.00 price target. PANW, +1.02% surged 8% after the cybersecurity company’s unusual late Friday report revealed earnings and a billings outlook above Street estimates as AI-backed cyber… Zooming in on valuation, it is https://1investing.in/ apparent that despite PANW’s superior cash flow profile, NGS platform and market leading position that the company still trades at a relative discount both to software peers and to large-cap tech peers. PCE has dramatically outpaced private investment in 2023 and is a sign that the economic expansion is in late stages in my opinion.
The company deserves more time in the spotlight, and the stock should get serious consideration from tech investors. Cybersecurity is also a desirable industry in case of a recession or economic slowdown. Companies can cut costs on advertising or labor but cannot afford to cut back on cybersecurity.
Zacks’ 7 BestStrong Buy Stocks for September, 2023
Another positive note for the company is the improvement in G&A spend (down to 5.6% of revenue from 7.1%) as well as the reduction in share-based comp (down 2.2% as a percentage of revenue YoY). PANW has performed well over the past year and Q4 earnings were well received by the market with the stock trading back up to near all-time highs. Palo Alto Networks is a leading cybersecurity company with a strong financial profile and a proven track record of delivering innovative and effective security solutions. With its focus on expanding its product offerings and global footprint, the company is positioned for continued growth in the cybersecurity market. Palo Alto Networks’ solutions are trusted by some of the world’s largest and most security-conscious organizations, including government agencies, financial institutions and healthcare providers.
If you’re the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies. Analysts’ growing optimism over the company’s earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term. Based on the recent corporate insider activity of 91 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of PANW in relation to earlier this year.
Zacks Mobile App
The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%. An industry with a larger percentage of Zacks Rank #1’s and #2’s will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4’s and #5’s. • Challenges in transitioning from hardware to more software and service-centric models in certain areas. Upgrade to MarketBeat All Access to add more stocks to your watchlist.
Other products include Prisma Cloud, which provides security for cloud-native applications. More and more businesses run software programs in the cloud nowadays, and the shift is permanent. The market has obviously priced software / cloud focused peers at a premium relative to hardware focused peers. PANW has gotten some credit for its transition to a Next-Gen security products however I believe the market is still underrating this move given that Next-Gen revenue is approaching 50% of total revenue. Over time as PANW establishes it’s NGS platform I believe it’s valuation will converge towards the software peer set which has historically traded ~4x above PANW on an LTM revenue basis.
Palo Alto Networks, Inc. (PANW)
Five years ago, Palo Alto Networks was primarily a next-gen firewall business that sold hardware and subscriptions. However, the company’s visionary CEO, Nikesh Arora, recognized the need to move into the cloud and address future cybersecurity needs. He also realized that recurring revenue through software-as-a-service (SaaS) offerings was essential to the business. Cyber peers trade cisa exam fee in india at slightly higher NTM revenue multiples overall despite lower FCF margins and revenue growth (overall pretty marginal differences, however an extra turn on the revenue multiple is ~10% delta in market cap). I think the better comp set moving forward will be large-cap tech given the favorable growth profile of the cyber industry and the recession-resilient business models.
Time will tell but obviously trying to predict the exact timing of a recession is not a good investment strategy. Dividend yield allows investors, particularly those interested in dividend-paying stocks,
to compare the relationship between a stock’s price and how it rewards stockholders through dividends. The formula for calculating dividend yield is to divide the annual dividend paid per share by the stock price. Currently, the analyst consensus on Palo Alto Networks is a Strong Buy with an average price target of $279.81, implying a 10.54% upside from current levels.
The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities. The below chart from JPM shows their estimate for excess savings from the COVID expansion / stimulus checks. An estimated $2.1T of excess savings were present in the economy at the peak in 2021 but have now been reduced to $0.3T and at the current rate of degradation shouldn’t last through the next quarter. Consumer credit card debt sits at record levels further indicating the stretched consumer balance sheet.
While other software peers have displayed less profitability, the market has assigned a higher revenue multiple which indicates to me the lack of appreciation for management’s tactical shift. Q4 was the nail in the coffin for my Buy recommendation as profitability substantially improved and the revenue mix was indicative of the success of the NGS products. Cortex security automation growth has been strong, reaching over 5,000 customers and average deal size growing 50% YoY. With leading market share and data access across multiple product categories (network, endpoint, cloud), PANW is well positioned to be a leader in AI-powered security (see below chart). While it’s hard to know for certain if there will be a recession, I do believe the risks are much more heavily weighted to the downside while the equity market continues to price in record earnings in 2024. I’m also skeptical that the economy will be able to sustain its strong footing in a higher rate environment with reduced credit creation.
Founded in 2005, Palo Alto Networks has become a market leader in next-generation firewall technology and cloud-based security solutions. Palo Alto Networks is a platform-based cybersecurity vendor with product offerings covering network security, cloud security, and security operations. The California-based firm has more than 85,000 customers across the world, including more than three fourths of the Global 2000. We are raising our fair value estimate to $245 from $225 for wide-moat Palo Alto Networks after the firm closed out fiscal 2023 with a robust set of results coupled with medium-term sales guidance ahead of our prior estimates. Whereas competitors like Fortinet have seen macro pressures affect forward-looking metrics such as billings, Palo Alto’s forward-looking metrics remained strong for the quarter.
- Palo Alto Networks, Inc. provides cybersecurity solutions worldwide.
- Another positive note for the company is the improvement in G&A spend (down to 5.6% of revenue from 7.1%) as well as the reduction in share-based comp (down 2.2% as a percentage of revenue YoY).
- Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.
- There are currently 3 hold ratings and 39 buy ratings for the stock.
The disappointing news impacted software stocks, with Palo Alto Networks trading lower by nearly 3% on Tuesday. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. Every tech company seems to be scrambling to let investors know it is into AI, but Palo Alto Networks was in this arena before the hype.
The company provides network security solutions to enterprises, service providers, and government entities. Similarly, capex intentions have fallen dramatically and while not at low levels seen in the past two recessions, businesses are still expected to spend less in the coming months. This weakened investment environment has resulted in more deferred payments from PANW customers however, impressively demand in still strong on a YoY and run-rate basis across products highlighting the resiliency of PANW’s platform. The US service sector has shown signs of weakness lately (leading indicators are more noisy than coincident). Interestingly, looking back at past recessions in the US the service sector has not seen dramatic declines in activity leading some to believe that the US service sector is “recession-proof” (or at least highly recessionary resistant). I’m skeptical of these claims and while the sector might overall be less cyclical than manufacturing it is not immune (in ‘08 similar claims were made about the housing market being recession proof).
TipRanks has tracked 36,000 company insiders and found that a few of them are better than others when it comes to timing their transactions. See which 3 stocks are most likely to make moves following their insider activities. Yahoo Finance anchor Seana Smith reports on Palo Alto stock up following the earnings report. Constellation Research Founder Ray Wang joins Seana and fellow anchor Diane King Hall to discuss P…