Needham & Company Raises Price Target on Palo Alto Networks (PANW) Following Analyst Day

Needham & Company reiterated a Buy rating on Palo Alto Networks (NYSE: PANW), and raised the price target to $187.00 (from $171.00), following the company's analyst day. In a direct quote, CFO Tomlinson wants investors to continue focusing on revenue growth, but also on the profitability of PANW. Notably, PANW reiterated previous guidance, and emphasized a 40% FCF yield on F3Q and F4Q. In a new metric, PANW disclosed “penetration rates” for its products in its 30,000 customer installed base.

Analyst Scott Zeller commented, "The Palo Alto Networks analyst day was upbeat, as expected, with strong attendance. As we previewed the event, we felt it was important that PANW communicate continued acceleration. We believe PANW conveyed the “accelerating” message by (a) disclosing attach rates by product, suggesting much upside potential, and (b) revealing that only 55% of the sales force is “productive,” suggesting future acceleration. Our side conversations with customers suggest the trend of “starting over” (standardizing) with PANW hasn’t slowed, and should sustain or accelerate revenue and deferred growth. Our EPS increases in FY17 materially on shrinking tax rate, and is now $2.67 EPS; revenue is unchanged. Our price target multiple increases from 8x to 9x EV/FY17 revenue and is $187. Maintain BUY."

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 $161.59 yesterday.

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