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Palo Alto Networks Inc PANW

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Morningstar’s Analysis

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Palo Alto Posts Profound Product Performance in an Impressive Q1; Raising FVE to $550

Mark Cash Senior Equity Analyst

Analyst Note

| Mark Cash |

We are raising our fair value estimate for narrow-moat Palo Alto Networks to $550 per share from $490 after its first-quarter results breezed by our lofty expectations for revenue growth and earnings, and we expect a higher rate of long-term growth. Shares jumped about 4% on the solid print, and we view shares as fairly valued. In the face of industry-wide supply shortages, Palo Alto posted incredibly strong product results as organizations are undergoing a firewall refresh cycle spurred by recently launched products and reopening offices. We believe that widespread hybrid work has caused an architectural shift in how organizations secure a wider perimeter that has a larger attack surface, and that a heightened threat environment is spurring strong security spending. Additionally, we think that organizations are coalescing their security spending toward fewer key vendors to have a more holistic approach to thwarting malicious threats, and that Palo Alto has leading security platforms for network security, cloud security, and security operations that are winning in an outsized manner.

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Company Profile

Business Description

Palo Alto Networks is a pure-play cybersecurity vendor that sells security appliances, subscriptions, and support into enterprises, government entities, and service providers. The company's product portfolio includes firewall appliances, virtual firewalls, endpoint protection, cloud security, and cybersecurity analytics. The Santa Clara, California, firm was established in 2005 and sells its products worldwide.

3000 Tannery Way
Santa Clara, CA, 95054
T +1 408 753-4000
Sector Technology
Industry Software - Infrastructure
Most Recent Earnings Oct 31, 2021
Fiscal Year End Jul 31, 2022
Stock Type Speculative Growth
Employees 11,098