Buy Rating on Palo Alto Networks Amid Strong Fiscal Performance and Market Share Gains

Morgan Stanley analyst Hamza Fodderwala has maintained their bullish stance on PANW stock, giving a Buy rating yesterday.

Hamza Fodderwala has given his Buy rating due to a combination of factors that signal a strong potential performance for Palo Alto Networks in the upcoming fiscal quarter. His confidence is buoyed by conservative estimates and reports of strong momentum in large deal negotiations. He anticipates that the company will beat billing expectations for the third fiscal quarter, which he believes will mitigate risks for the fourth fiscal quarter and set the stage for revenue acceleration in fiscal year 2025.

Furthermore, Fodderwala’s analysis points to Palo Alto Networks’ success in gaining market share across various security categories, underpinned by effective platformization strategies and a focus on consolidating vendors that resonate with customer demands. He also notes a resurgence in the public sector spending, exemplified by Palo Alto Networks’ involvement in significant government projects. With these factors in mind, along with a valuation he deems reasonable, Fodderwala posits that an upside in billings could lead to a positive market response for the stock, while even a modest beat relative to expectations is unlikely to cause a significant adverse reaction given the current valuation multiples.

In another report released yesterday, JMP Securities also maintained a Buy rating on the stock with a $380.00 price target.

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Palo Alto Networks (PANW) Company Description:

California-based Palo Alto Networks, Inc., founded in 2005, is a global cybersecurity leader. The company provides network security solutions to enterprises, service providers, and government entities.