Palo Alto Networks (PANW) AI Stock Analysis

• Market Cap: $118.20B
• Dividend Yield: N/A
• Average Volume (3M): 9.23M
• Price to Earnings (P/E): 110.0
• Beta (1Y): 1.29
• Revenue Growth: 14.87%
• EPS Growth: -57.43%
• Country: US
• Employees: 15,758
• Sector: Technology
• Sector Strength: 92
• Industry: Software - Infrastructure
• EPS (TTM): 0.95
• Shares Outstanding: 667,472,960
• 10 Day Avg. Volume: 10,616,415
• 30 Day Avg. Volume: 9,233,843
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.10
• Enterprise Value/Revenue: 14.61
• Enterprise Value/Gross Profit: 19.86
• Enterprise Value/Ebitda: 78.24
• 1Y Price Target: $217.66
• Price Target Upside: 19.88% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 39

• Rating: 72 Outperform
• Price Target: $197.00 ▲(8.50% Upside)

Palo Alto Networks' overall stock score reflects strong financial performance and positive earnings call sentiment, which are the most significant factors. However, the high P/E ratio and bearish technical indicators weigh down the score. The company's strategic initiatives, including the CyberArk merger, are expected to drive future growth, but current valuation concerns and technical weakness present risks.

Positive Factors

Earnings

Palo Alto Networks exhibited broad-based momentum in 4Q, with an impressive 120% NRR for platform deals, and Cortex and Prisma Cloud ARR up 25% YoY through new modules like exposure management, application security and extended Data Lake.

Guidance

Guidance for FY26 was solidly above consensus across all metrics, indicating strong future performance expectations.

Product Growth

XSIAM growth was also impressive, with management stating that XSIAM is PANW’s fastest growing product ever, now used by 400 customers, up from 270 customers last quarter and double from the year-ago period.

Negative Factors

Growth Momentum

The organic upside in FQ4’25 was likely lower than recent quarters, indicating less growth momentum.

Margins

The risks to our rating are mainly around concerns regarding peaking margins and valuation limitation.

Palo Alto Networks Business Overview & Revenue Model

Company Description

Palo Alto Networks, Inc. (PANW) is a global cybersecurity leader specializing in providing advanced security solutions for enterprises, service providers, and government entities. The company operates primarily in the cybersecurity sector, delivering a comprehensive suite of products and services that include next-generation firewalls, cloud-based security, endpoint protection, and threat intelligence. With a focus on innovation, Palo Alto Networks aims to protect organizations from cyber threats through its integrated platform that spans across various environments, including on-premises, cloud, and hybrid infrastructures.

How the Company Makes Money

Palo Alto Networks generates revenue primarily through the sale of its cybersecurity products and associated subscription services. The company operates on a recurring revenue model, which includes subscription offerings for its software and services, as well as hardware sales of its next-generation firewalls. Key revenue streams include subscriptions for its cloud security, endpoint protection, and threat intelligence services. Additionally, Palo Alto Networks benefits from professional services, such as consulting and training, which further enhance its revenue. The company has established significant partnerships with technology providers and system integrators that bolster its market presence and expand its reach, thus contributing to its earnings.

Palo Alto Networks Financial Statement Overview

Summary

Palo Alto Networks demonstrates strong financial health with significant improvements in profitability and cash flow generation. The company has successfully increased its revenue and profit margins, while maintaining a solid balance sheet with low leverage. While there are some areas for improvement, such as EBIT margin enhancement and managing high liabilities, the overall financial trajectory is positive, positioning the company well for future growth and stability.

Income Statement

Palo Alto Networks has shown a solid financial performance with a strong gross profit margin of 73.6% for TTM (Trailing-Twelve-Months) and a robust revenue growth rate of 10.6% compared to the previous year. The net profit margin improved significantly from a negative margin in earlier years to 13.9%, indicating enhanced profitability. EBITDA margin also stands strong at 18.7%. These metrics reflect the company's successful revenue growth and cost management strategies, although there is room for improving the EBIT margin which is currently at 11.1%.

Balance Sheet

The company's balance sheet shows a healthy debt-to-equity ratio of 0.11, indicating low leverage and risk. The return on equity (ROE) has significantly improved to 17.1% for TTM, reflecting efficient use of equity capital. The equity ratio has also increased to 32.9%, suggesting a strengthening financial position. However, the overall liabilities remain high, indicating a need for continued focus on debt management.

Cash Flow

Palo Alto Networks exhibits strong cash flow management with a free cash flow growth rate of -3.2%, indicating a slight decline from the previous period but still a robust free cash flow of $3 billion. The operating cash flow to net income ratio is 2.59, demonstrating strong cash generation capability relative to net income. Free cash flow to net income ratio at 2.42 further highlights strong cash earnings, supporting operational and financial flexibility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	8.87B	8.03B	6.89B	5.50B	4.26B	3.41B
Gross Profit	6.53B	5.97B	4.98B	3.78B	2.98B	2.41B
EBITDA	1.66B	1.28B	869.00M	95.60M	-46.60M	59.50M
Net Income	1.24B	2.58B	439.70M	-267.00M	-498.90M	-267.00M
Balance Sheet
Total Assets	22.00B	19.99B	14.50B	12.25B	10.24B	9.07B
Cash, Cash Equivalents and Short-Term Investments	3.30B	2.58B	2.39B	3.63B	2.90B	3.75B
Total Debt	806.00M	1.34B	2.27B	3.95B	3.54B	3.42B
Total Liabilities	14.77B	14.82B	12.75B	12.04B	9.48B	7.96B
Stockholders Equity	7.23B	5.17B	1.75B	210.00M	763.60M	1.10B
Cash Flow
Free Cash Flow	3.00B	3.10B	2.63B	1.79B	1.39B	821.30M
Operating Cash Flow	3.21B	3.26B	2.78B	1.98B	1.50B	1.04B
Investing Cash Flow	-1.61B	-1.51B	-2.03B	-933.40M	-1.48B	288.00M
Financing Cash Flow	-584.10M	-1.34B	-1.73B	-806.60M	-1.10B	673.00M

Palo Alto Networks Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 181.56
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PANW, the sentiment is Neutral. The current price of 181.56 is above the 20-day moving average (MA) of 180.42, below the 50-day MA of 191.13, and below the 200-day MA of 187.34, indicating a neutral trend. The MACD of -4.65 indicates Negative momentum. The RSI at 49.57 is Neutral, neither overbought nor oversold. The STOCH value of 73.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for PANW.

Palo Alto Networks Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FTNT	77 Outperform	$60.62B	32.23	165.17%	―	14.46%	48.06%
CHKP	76 Outperform	$20.44B	24.50	30.30%	―	6.27%	7.14%
ZS	75 Outperform	$42.81B	―	-2.68%	―	25.46%	49.20%
PANW	72 Outperform	$118.20B	109.96	17.45%	―	14.87%	-57.43%
NET	70 Neutral	$70.01B	―	-11.04%	―	27.32%	-11.94%
CRWD	69 Neutral	$106.26B	721.64	-5.76%	―	25.94%	-226.80%
Sector *	62 Neutral	CHF2.52B	-22.84	1.43%	2.26%	-17.83%	-0.68%

Palo Alto Networks Corporate Events

Palo Alto Networks Announces Leadership Changes and Growth

On August 18, 2025, Palo Alto Networks announced significant changes in its leadership and governance structure. Nir Zuk resigned as Chief Technology Officer and director, while Lee Klarich was appointed to the board and as Chief Product and Technology Officer. The company also reported strong financial results for the fiscal year 2025, with a 16% increase in fourth-quarter revenue and a 15% rise in annual revenue, reaching $9.2 billion. The company continues to demonstrate robust growth and operational efficiency, positioning itself well for future expansion.

Palo Alto Networks Announces Merger with CyberArk

On July 30, 2025, Palo Alto Networks entered into a merger agreement with CyberArk Software, whereby CyberArk will become a wholly owned subsidiary of Palo Alto Networks. The merger, subject to customary closing conditions and regulatory approvals, involves CyberArk shareholders receiving shares of Palo Alto Networks and cash. The merger aims to strengthen Palo Alto Networks’ position in the cybersecurity sector, with both companies’ boards unanimously approving the agreement. Termination fees are outlined for specific circumstances, ensuring commitment to the merger process.

Palo Alto Networks Announces Merger with CyberArk

On July 30, 2025, Palo Alto Networks announced a merger agreement with CyberArk Software Ltd., aiming to enhance its platformization strategy by integrating identity security. The merger is expected to be accretive to revenue growth and gross margin immediately post-close, with significant synergy potential through cross-selling opportunities to Palo Alto’s extensive customer base.