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Palo Alto Networks Inc PANW

Rating as of

Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Palo Alto Continues Streak of Torrid Growth in Q3 Across Network and Next-Gen Offerings; $400 FVE

Mark Cash Senior Equity Analyst

Analyst Note

| Mark Cash |

We are maintaining our $400 fair value estimate for narrow-moat Palo Alto Networks after its third-quarter results, and view shares as modestly undervalued. While most cybersecurity participants are being lifted by an elevated threat environment and headline breaches spurring security spending, we believe Palo Alto’s platform approach to various parts of security are driving market outperformance. We expect Palo Alto’s heavy investments into cloud security and automation, fueled by the core firewall business’ strong free cash flow generation, to drive strong growth and keep customers locked into the Palo Alto ecosystem. While we do not expect positive GAAP net income for a few more years, we believe the organization is properly investing to stake its claim within the embryonic cloud security and automation markets, prior to showcasing solid margin expansion throughout the decade.

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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.

Contact
3000 Tannery Way
Santa Clara, CA, 95054
T +1 408 753-4000
Sector Technology
Industry Software - Infrastructure
Most Recent Earnings Apr 30, 2021
Fiscal Year End Jul 31, 2021
Stock Type Speculative Growth
Employees 9,715

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