Palo Alto Ends Fiscal 2022 on a High Note; Maintain FVE; Shares Fairly Valued

We are maintaining our $590 fair value estimate for wide-moat Palo Alto Networks after its strong fourth-quarter financial results topped our expectations on the bottom line. With shares up more than 8% on the robust results and strong guidance for fiscal year 2023, we see shares as fairly valued. However, we reiterate our belief that Palo Alto will continue to outpace its security peers by focusing on providing solutions in areas like cloud security and automation. Palo Alto's leading platform approach for network security, cloud security, and security automation is spurring organizations to consolidate spending toward its products, which increases switching costs, in our view. We anticipate the company will reap the positive effects of having customers locked into its ecosystem as it approaches GAAP profitability on a more consistent basis.