Palo Alto Networks (PANW)
NASDAQ:PANW
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Palo Alto Networks
(NASDAQ:PANW)
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Rating:74Outperform
Price Target:
$165.00
▲(5.95% Upside)
Action:ReiteratedDate:03/12/26
The score is driven primarily by strong financial quality (profitability improvement, low leverage, and robust free cash flow) and supportive earnings guidance (high margins and strong ARR/RPO growth outlook). These positives are tempered by weak-to-mixed technicals (below key longer-term moving averages with negative MACD) and a demanding valuation (high P/E with no dividend yield provided).
Positive Factors
Recurring subscription revenue & high gross margins
A high gross margin (~73.5%) combined with a business model driven by recurring subscriptions creates durable, predictable cash flow. This supports sustained R&D, platform investment, and high free cash flow conversion, strengthening long‑term margin sustainability and reinvestment capacity.
Negative Factors
Acquisition-driven growth and near-term dilution
Heavy reliance on acquisitions to meet ARR and revenue targets reduces transparency into organic growth and risks diluting shareholders. Large share issuance and cash payouts can compress near‑term EPS and add pressure on integration, diverting management focus from organic product execution.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring subscription revenue & high gross margins
A high gross margin (~73.5%) combined with a business model driven by recurring subscriptions creates durable, predictable cash flow. This supports sustained R&D, platform investment, and high free cash flow conversion, strengthening long‑term margin sustainability and reinvestment capacity.
Read all positive factors
Palo Alto Networks (PANW) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$136.26B
Dividend YieldN/A
Average Volume (3M)7.93M
Price to Earnings (P/E)71.2
Beta (1Y)1.27
Revenue Growth15.30%
EPS Growth-60.71%
CountryUS
Employees15,758
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)1.03
Shares Outstanding816,000,000
10 Day Avg. Volume7,513,712
30 Day Avg. Volume7,930,533
Financial Highlights & Ratios
PEG Ratio-1.76
Price to Book (P/B)14.70
Price to Sales (P/S)12.47
P/FCF Ratio33.15
Enterprise Value/Market Cap0.75
Enterprise Value/Revenue10.34
Enterprise Value/Gross Profit14.07
Enterprise Value/Ebitda46.48
Forecast
1Y Price Target
$213.13Price Target Upside36.86% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering31
EPS Forecast (FY)3.69
Revenue Forecast (FY)$11.27B
Palo Alto Networks Business Overview & Revenue Model
Company Description
Palo Alto Networks, Inc. provides cybersecurity solutions worldwide. The company offers firewall appliances and software; Panorama, a security management solution for the control of firewall appliances and software deployed on an end-customer's ne...
How the Company Makes Money
Palo Alto Networks makes money primarily by selling cybersecurity subscriptions and support tied to its software platforms and security services. A significant portion of revenue is generated from recurring subscriptions, including term-based lice...
Palo Alto Networks Key Performance Indicators (KPIs)
Any
Revenue by Segment
Breaks down revenue across various business lines, showing which areas are contributing most to growth and where strategic focus might be needed.
Breaks down revenue across various business lines, showing which areas are contributing most to growth and where strategic focus might be needed.
Data provided by:
The Fly
The FlyPalo Alto Networks Earnings Call Summary
Earnings Call Date:Feb 17, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:May 26, 2026
Earnings Call Sentiment Positive
The call communicated strong underlying demand, robust ARR and revenue growth, product momentum across SASE, XSIAM and AI security, expanding profitability and exceptional free cash flow generation. Management concurrently announced two transformative acquisitions (Chronosphere and CyberArk) that materially bolster observability and identity capabilities and contribute to near-term ARR and pipeline. Key near-term concerns include acquisition-driven growth and dilution, margin mix pressures in services and sequential product mix, supply-chain cost impacts, and integration/financial complexity from large deals. On balance, the operational results, traction in strategic AI and platform initiatives, and sustained profitability and cash flow outweigh the near-term integration and mix headwinds.Positive Updates
Strong NGS ARR Growth
Next-generation security (NGS) ARR grew 33% to $6.33B (includes ~$200M from Chronosphere). Organic NGS ARR rose 28% year-over-year, with net new ARR up 11% YoY.
Negative Updates
Acquisition-Driven Growth and Near-Term Dilution
Guidance and reported ARR include significant M&A contributions (Q3 NGS ARR guidance includes ~$1.47B from M&A; FY includes ~$1.52B). CyberArk consideration included issuance of 112M shares and planned $2.3B cash outlay in Q3 (combined cash outlay for Chronosphere + CyberArk ~$4.9B), increasing share count and near-term dilution.
Read all updates
Q2-2026 Updates
Positive
Negative
Strong NGS ARR Growth
Next-generation security (NGS) ARR grew 33% to $6.33B (includes ~$200M from Chronosphere). Organic NGS ARR rose 28% year-over-year, with net new ARR up 11% YoY.
Read all positive updates
Company Guidance
Management guided Q3 FY26 and full‑year FY26 figures inclusive of CyberArk and Chronosphere: for Q3 they expect NGS ARR $7.94–7.96B (up ~56%, including $1.47B M&A), RPO $17.85–17.95B (up 32–33%, $1.6B M&A), revenue $2.941–2.945B (up 28–29%, $340M M&A), diluted non‑GAAP EPS $0.78–0.80 and fully diluted shares 812–817M; for the full year they expect NGS ARR $8.52–8.62B (up 53–54%, $1.52B M&A), RPO $20.2–20.3B (up ~28%, $1.6B M&A), revenue $11.28–11.31B (up 22–23%, $760M M&A), operating margin 28.5–29%, diluted non‑GAAP EPS $3.65–3.70, fully diluted shares 768–773M and adjusted free cash flow margin ~37%. They also forecast Q3 product revenue growth ~25% and full‑year product growth in the low‑20s, and noted CyberArk ARR was conformed to Palo Alto’s subscription definition (reported NGS ARR for CyberArk expected ~2–3% lower than CyberArk’s prior bookings‑based ARR).Palo Alto Networks Financial Statement Overview
Summary
Income Statement
83
Very Positive
Balance Sheet
90
Very Positive
Cash Flow
88
Very Positive
| Breakdown | TTM | Jul 2025 | Jul 2024 | Jul 2023 | Jul 2022 | Jul 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 9.89B | 9.22B | 8.03B | 6.89B | 5.50B | 4.26B |
| Gross Profit | 7.27B | 6.77B | 5.97B | 4.98B | 3.78B | 2.98B |
| EBITDA | 2.20B | 1.94B | 1.28B | 869.00M | 95.60M | -46.60M |
| Net Income | 1.28B | 1.13B | 2.58B | 439.70M | -267.00M | -498.90M |
Balance Sheet | ||||||
| Total Assets | 24.98B | 23.58B | 19.99B | 14.50B | 12.25B | 10.24B |
| Cash, Cash Equivalents and Short-Term Investments | 4.54B | 2.90B | 2.58B | 2.39B | 3.63B | 2.90B |
| Total Debt | 372.00M | 338.20M | 1.34B | 2.27B | 3.95B | 3.54B |
| Total Liabilities | 15.59B | 15.75B | 14.82B | 12.75B | 12.04B | 9.48B |
| Stockholders Equity | 9.39B | 7.82B | 5.17B | 1.75B | 210.00M | 763.60M |
Cash Flow | ||||||
| Free Cash Flow | 4.07B | 3.47B | 3.10B | 2.63B | 1.79B | 1.39B |
| Operating Cash Flow | 3.97B | 3.72B | 3.26B | 2.78B | 1.98B | 1.50B |
| Investing Cash Flow | -1.61B | -2.20B | -1.51B | -2.03B | -933.40M | -1.48B |
| Financing Cash Flow | -433.00M | -778.90M | -1.34B | -1.73B | -806.60M | -1.10B |
Palo Alto Networks Technical Analysis
Negative
155.73
Price Trends
161.07
Negative
174.94
Negative
186.87
Negative
Market Momentum
0.36
Negative
44.20
Neutral
55.41
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PANW, the sentiment is Negative. The current price of 155.73 is below the 20-day moving average (MA) of 162.50, below the 50-day MA of 161.07, and below the 200-day MA of 186.87, indicating a bearish trend. The MACD of 0.36 indicates Negative momentum. The RSI at 44.20 is Neutral, neither overbought nor oversold. The STOCH value of 55.41 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PANW.
Palo Alto Networks Risk Analysis
Palo Alto Networks disclosed 47 risk factors in its most recent earnings report. Palo Alto Networks reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Palo Alto Networks Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $136.26B | 71.18 | 15.49% | ― | 15.30% | -60.71% | |
72 Outperform | $56.75B | 31.84 | 123.64% | ― | 14.78% | 22.52% | |
70 Outperform | $100.10B | 720.36 | -4.68% | ― | 22.05% | -341.24% | |
69 Neutral | $14.79B | 18.84 | 36.62% | ― | 6.31% | 25.27% | |
67 Neutral | $18.98B | -232.70 | -3.48% | ― | 23.24% | -8.83% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
PANW
Palo Alto Networks
155.73
-14.25
-8.38%
CHKP
Check Point
135.22
-84.88
-38.56%
FTNT
Fortinet
76.70
-20.15
-20.81%
ZS
Zscaler
118.05
-81.39
-40.81%
CRWD
CrowdStrike Holdings
379.02
0.36
0.10%
Palo Alto Networks Corporate Events
Private Placements and FinancingRegulatory Filings and Compliance
Palo Alto Networks Linked to CyberArk Convertible Notes Settlement
Neutral
Mar 23, 2026
On March 23, 2026, CyberArk Software Ltd. notified holders of its 0.00% Convertible Senior Notes due 2030, as well as the trustee U.S. Bank Trust Company, National Association and conversion agent, that the Default Settlement Method for conversion...
Business Operations and StrategyStock Buyback
Palo Alto Networks Adds $1 Billion to Share Buyback
Positive
Mar 12, 2026
Palo Alto Networks, Inc., a leading cybersecurity provider of network and cloud security solutions, serves enterprises and public-sector customers globally with platforms designed to protect digital infrastructure and data across complex IT enviro...
Business Operations and StrategyDelistings and Listing ChangesM&A Transactions
Palo Alto Networks Completes CyberArk Acquisition, Expands Identity Security
Positive
Feb 11, 2026
On February 11, 2026, Palo Alto Networks completed its acquisition of Israeli identity-security specialist CyberArk, making CyberArk a wholly owned subsidiary and folding its 0.00% Convertible Senior Notes due 2030 into a new structure guaranteed ...
Business Operations and StrategyM&A Transactions
Palo Alto Networks Completes Chronosphere Acquisition to Boost AI Security
Positive
Jan 29, 2026
On January 29, 2026, Palo Alto Networks completed its acquisition of Chronosphere, a cloud-native observability specialist recognized in Gartner’s 2025 Magic Quadrant for Observability Platforms, folding it into the company as a wholly owned...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.