Palo Alto's Platforms Perform Solidly in Q2 with Broad Strength; Shares Undervalued to Our $585 FVE

We are maintaining our $585 fair value estimate after wide-moat Palo Alto Networks' robust second-quarter results met our lofty expectations for revenue growth and surpassed our anticipation for earnings. We believe Palo Alto shares, which popped more than 6% on the strong results and outlook raise, still offer solid upside. In our view, Palo Alto is at the forefront of enabling organizations to consolidate cybersecurity spending concerns across network security, cloud security, and security automation. By alleviating security toolset sprawl and security alert fatigue, we think Palo Alto becomes an essential part of organizations' operations and locks customers into its ecosystems for the long-term. Alongside the platform-approach that offers ample up- and cross-selling opportunities for Palo Alto, we think the company is seizing the moment of organizations rearchitecting their cybersecurity posture for hybrid work and cloud ecosystems amid a heightened threat environment.