Palo Alto Networks: Strong Financial Performance and Strategic Acquisitions Justify Buy RatingWe believe the level of valuation is partially attributable to the fact that Chronosphere is seeing strong ARR growth, and that this acquisition should help expand PANW’s development opportunity in observability industry with high growth potential. We roll over our valuation window to FY26E, and our TP is lifted to US$236.7, based on 15.4x EV/sales multiple, inline with two-year average EV/sales plus 2 s.d. (was 16.0x). BUY. Solid 1QFY26 results. In 1QFY26, subscription and support revenue grew 14.3% YoY to US$2.0bn, inline with consensus, and accounted for 82.5% of PANW’s total revenue (1QFY25: 83.5%), while product revenue came in 3% ahead of consensus. Next-Generation Security (NGS) ARR reached 4QFY25: 32.2%).