FBR Capital Upgrades Palo Alto Networks (PANW) to Outperform

March 25, 2014 6:29 AM EDT
Get Alerts PANW Hot Sheet
Price: $489.54 -5.8%

Rating Summary:
    46 Buy, 8 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 25 | Down: 19 | New: 35
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FBR Capital upgraded Palo Alto Networks (NYSE: PANW) from Market Perform to Outperform with a price target of $90.00 (from $80.00) citing increased estimates and more confidence in the business given recent checks as well as the company's expanding TAM (e.g., Cyvera acquisition announced yesterday).

Analyst Daniel Ives commented, "Our checks indicate faster-than-expected adoption of PANW's appliances/services and a more productive sales force, coupled with ongoing secular strength. To this point, we believe strong cybersecurity spending is leading to the company's good progress in the field for both its appliances and SaaS business (e.g., Wildfire) as it appears a solid product cycle and subscription offering are giving PANW tailwinds that we believe position it for robust top-line/billings growth (we estimate 45% revenue growth for FY14 and 33% for FY15 excluding the Cyvera acquisition) over the next 12 to 18 months. We also expect Palo Alto to benefit from larger deal sizes as we are seeing evidence of broad-based demand across all geographies for Palo Alto's next-generation firewall (NGFW) solutions, with M&A (e.g., Cyvera, Morta) poised to add cross-sell opportunities to its growth prospects in coming years."

For FY14, the firm is increasing total revenue estimate from $570.6 million to $574.2 million while leaving pro forma EPS estimate unchanged at $0.43. For FY15, they are increasing total revenue and pro forma EPS estimates from $750.0 million and $0.77 to $762.3 million and $0.78.

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 $73.13 yesterday.


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