Palo Alto Networks (PANW) PT Raised to $370 at Barclays
Barclays analyst Saket Kalia raised the price target on Palo Alto Networks (NASDAQ: PANW) to $370.00 (from $350.00) while maintaining a Overweight rating.
The analyst comments "Four points beyond the headlines on PANW's FY25 guide: (1) we spend some time on platformizations, including the total TAM of ~15k platformizations of which PANW needs ~3k, how the top 5k customers (which are the main targets of platformization) make up ~80% of NGS ARR, and how the FY30 target is far away but could become more important as platformizations grow; (2) PANW expectedly started guiding RPO on this call, so we are reformatting our model to start with RPO bookings growth of ~15% in FY25 to which we apply a book-to-bill ratio of less than 100%, getting us to 11% billings growth in FY25 - the rest of our product/subscription waterfall remains unchanged; (3) FY25 FCF margin guide of 37-38% maintains the 37%+ LT target PANW has talked about - we estimate about a third of PANW's bookings could still transition away from multi-year to annual billing, but there is also still room for PANW to expand operating margins to its LT aspiration of low-to-mid 30s - more details on the components of billings below; (4) FY25 guide includes the acquisition of IBM's QRadar-on-Cloud business (referred to as QRoC), we estimate $30-50M of revenue in FY25 - but the bigger opportunity is ~$500M of on-premise QRadar business that can be converted to XSIAM over time at what we estimate will be a 2x multiplier. Our PT goes to $370."