Palo Alto Networks (PANW) PT Raised to $210 at Baird; Leader in Fragmented Market

Baird analyst Jayson Noland reiterated an Outperform rating and boosted his price target on Palo Alto Networks (NYSE: PANW) to $210.00 (from $175.00) Wednesday. Noland sees network security as a fragmented market with clear secular tailwinds, and continues to believe Palo Alto Networks has an opportunity to become the primary IT Security provider as the market expands and consolidates.

Noland notes Palo Alto is roughly 8% of the market now and is growing considerably faster than mainstream competitors. "The top five vendors represent ~55% of the total market but we often hear in the channel that Palo Alto is the security company receiving the most internal resources," he said. The analyst said Palo Alto has the potential long-term to achieve 20% or more of the overall IT Security market.

In recent channel feedback, one customer told the firm, "Palo Alto is doing really well. We tripled our business with them last year." Another one said, "We are focused on a half dozen really strategic partners. That will include Checkpoint, Palo Alto, and Cisco. Each player will be a very large contributor with 50% product and 50% services. FireEye is struggling a lot."

The analyst also believes the industry needs consolidation. "We are told by end-users and the channel that the security vendor landscape is way to complicated (no surprise)," he commented. "As such, we see the opportunity for incremental market consolidation over the next 5-10 years (fewer and larger winners)."

For an analyst ratings summary and ratings history on Palo Alto Networks click here. For more ratings news on Palo Alto Networks click here.

Shares of Palo Alto Networks closed at $181.93 yesterday.

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