Palo Alto Earnings: We Look Past the Billings Wobble as Palo Alto Clocks Another Strong Period

We are raising our fair value estimate to $250 from $245 for wide-moat Palo Alto Networks after the firm kicked off fiscal 2024 with strong financial results including better-than-expected profitability. While competitors like Fortinet have seen forward-looking metrics affected by a downturn in customer spending on hardware appliances, Palo Alto’s pivot away from hardware firewalls continues to insulate the business’ financials and metrics. As part of this pivot, Palo Alto has built security solutions that serve a wide range of customer needs. In a period when customer spending on hardware firewalls is strained, Palo Alto’s non-firewall security platforms have enabled the firm to maintain a robust business pipeline and produce strong financial results.