Palo Alto Networks’ Strategic Expansion and Partnership with IBM Bolster Buy Rating

In a report released yesterday, Gray Powell from BTIG reiterated a Buy rating on Palo Alto Networks (PANW – Research Report), with a price target of $366.00.

Gray Powell has given his Buy rating due to a combination of factors centering around Palo Alto Networks’ (PANW) strategic moves in the cybersecurity space. The firm’s recent announcement to extend its partnership with IBM and acquire IBM’s QRadar SaaS business is a primary driver for the optimistic outlook. Palo Alto Networks is expected to significantly benefit from IBM’s decision to integrate PANW’s solutions across its network security, cloud, and SOC solutions, with the potential to add approximately $50MM to $75MM in annual revenue. While IBM was already a customer of Palo Alto Networks, the upsell opportunity is substantial and exemplifies PANW’s capability to help large enterprise customers consolidate various security products under a single vendor’s banner.

Additionally, the acquisition of QRadar’s SaaS business is poised to bolster Palo Alto Networks’ presence and momentum in the Security Information and Event Management (SIEM) market, especially at a time when competitors are undergoing transitions, such as Splunk’s acquisition by Cisco. This market development could open doors for PANW to capture additional market share. Furthermore, the deepened partnership with IBM, including training of IBM consultants on PANW products and the preferred MSSP status for IBM Consulting, significantly enhances PANW’s positioning. The anticipated seamless migration for QRadar customers to PANW’s Cortex XSIAM, along with the incremental revenue from this transition, supports the Buy rating and the $366 price target. This target is based on a forward-looking valuation multiple that reflects confidence in the company’s future cash flows and growth trajectory.

In another report released today, Jefferies also maintained a Buy rating on the stock with a $365.00 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.