UPDATE: Loop Capital Upgrades Palo Alto Networks (PANW) to Buy
Loop Capital analyst Yun Kim upgraded Palo Alto Networks (NASDAQ: PANW) from Hold to Buy with a price target of $200.00.
The analyst comments "We are upgrading shares of PANW from Hold to Buy with a $200 PT (from $183 after a 3-for-1 stock split). Our most recent industry checks indicate that PANW's enterprise business is showing signs of accelerating momentum driven by an increase in large deal activity. As we previously highlighted in our earnings preview note a quarter ago, the supply-chain issues related to its core firewall business were holding up some large strategic deals for the company. With our industry checks indicating that the supply-chain issues are starting to ease, we are beginning to hear that the company's enterprise business is gaining momentum driven by increasing strength in large-deal activity. We expect this positive momentum to continue for some time given the prolonged tail of the current product refresh cycle. Overall, we are expecting strong F1Q results driven by a strong contribution from its enterprise business. We are also expecting the company to at least maintain its previously issued FY23 guidance despite the macro headwinds that are prompting many security software companies to take a more conservative approach to guidance going forward. Our most recent industry check indicates that the overall spending on cybersecurity remains healthy, but there seems to be a spending mix shift towards automation/analytics and cloud workload security. We expect PANW's highly regarded solution around its analytics/automation (Cortex) and cloud security (Prisma Cloud) to benefit from this spending shift as it leverages its large installed base who are largely committed to PANW as its de facto standard vendor for their security needs. Hence, we expect PANW to show strength not only in its core firewall business but also in its highly strategic Prisma Cloud and Cortex business within its large enterprise installed base, which should be reflected in its Next-Gen Security (NGS) ARR growth this year. Overall, in our view, PANW continues to execute its plan to become the industry's most comprehensive cybersecurity platform. Our new $200 PT is supported by higher free cash flow estimates in out-years (FY25 and beyond) in our DCF model."
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Shares of Palo Alto Networks closed at $151.57 yesterday.