Palo Alto Posts Impressive Results and Remains Confident in Underlying Demand; Maintain FVE

We are maintaining our $200 fair value estimate for wide-moat Palo Alto Networks after the company reported solid second-quarter results for fiscal 2023. With shares up 8% after-hours, as the firm meaningfully came ahead of FactSet consensus, we still see marginal upside for investors searching for high-quality, cybersecurity exposure. In our view, Palo Alto’s leading platform approach for network security, cloud security and security automation is prompting organizations to consolidate spending toward its products, which increases switching costs. We believe Palo Alto is well-positioned to benefit from customers becoming increasingly embedded in its ecosystem, as its sticky solutions are built for integration across an enterprise’s IT infrastructure.