Palo Alto Networks (PANW) PT Raised to $425 at Barclays

Barclays analyst Saket Kalia raised the price target on Palo Alto Networks (NASDAQ: PANW) to $425.00 (from $410.00) while maintaining a Overweight rating.

The analyst comments "Five points into PANW's fiscal 1Q25: (1) we model ~11% y/y growth in 1Q RPO bookings, and would not be surprised to see moderate upside due to positive checks, normal seasonality, and an easier comparable; (2) checks highlighted strength in August and September, which is not always the case coming off a strong 4Q historically - we heard good feedback on the platformization strategy and are picking up continued strength in US fed beyond just this quarter, though would say read-throughs from peers are mixed as CHKP and Exclusive Networks (Euronext: EXN/not covered) saw softness in EMEA (though PANW's EMEA business is smaller); (3) we model inline 1Q NGS ARR at $4,355M or $135M in net new ARR, but would not be surprised to see net new ARR flat y/y in an upside scenario given the strength in platformizations (all of which funnel into the NGS line) and the historical trend of growing NNARR - this reminds us of the 1Q beat level in FY23 where PANW nudged up its FY guide by less than the 1Q beat, so we wonder if we could see a similar approach coming out of this quarter; (4) although RPO is a new guidance metric and it's still early in the year, we think PANW could flow through the 1Q beat to its FY25 RPO guide as RPO and revenue this year are biased upward in our view and PANW has historically flowed through the 1Q beat on previous primary topline guidance metrics like billings; (5) we estimate QRoC could make up ~$30-50M in FY25 revenue with the additional opportunity to transition the on-prem QRadar base to XSIAM over time at a ~2x multiplier. From a valuation perspective, we wonder if upside from here will come more from upside to estimates rather than multiple expansion since PANW is trading inline/slightly ahead of core, large-cap software names, but we feel good about the setup on RPO, NGS ARR, and revenue into the quarter so we tweak our price target up to $425 based on ~33x our FY27E FCF, discounted back."

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