Cantor Fitzgerald Reiterates Overweight Rating on Palo Alto Networks (PANW)

Cantor Fitzgerald analyst Jonathan Ruykhaver reiterated an Overweight rating and $350.00 price target on Palo Alto Networks (NASDAQ: PANW).

The analyst comments "We reiterate our Overweight rating and maintain our price target at $350 post the F3Q24 results update. Palo Alto Networks delivered a "met expectations" quarter on revenue in line with FactSet consensus (+90 bps vs. consensus), billings (inline), and free cash flow (FCF) (+19.3% vs. consensus). The results were in line with our expectations coming into the quarter, see our Cantor Security Channel Trends: May 2024 Update (note here) and our Setup Preview (note here). We did not expect substantial upside to the guidance and that's how the quarter played out. Unsurprisingly, the Platformization initiative announced last quarter took up a bulk of the airtime. PANW disclosed the average Next-Gen Security Annual Recurring Revenue (NGS ARR) was a healthy $2M per customer using a single platform but could be 7x that, up to ~$14M if the customer adopts all three platform pillars. The company added ~65 new platformizations this quarter, up 40% since F2Q and ~900 since inception. While we believe there is still a way to go until it hits the projected target of 2,500 to 3,000for it to achieve the ambitious $15B in NGS ARR by FY2030E, we view this as a great first step. The other major update in the quarter is the acquisition of IBM QRadar for $500M plus earnouts to successfully drive on-premise conversion to XSIAM. We view the addition of QRadar as a customer land-grab opportunity for PANW and the investment outlay is not too unreasonable, hence, we are overall positive here. We understand patience is needed to execute the Platformization/ Consolidation & AI Strategy, and therefore would require a longer investment time horizon to make this work but the light at the end of the tunnel is NGS ARR to reach $15B with >90% recurring revenue mix by 2030E."

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 $323.77 yesterday.

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