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Palo Alto Networks (PANW) is a multinational cybersecurity company that offers network security, cloud security, and security operations. Trusted by more than 85,000 clients globally, the company innovates cutting-edge technology by merging firewalls, artificial intelligence (AI)-powered threat monitoring, and cloud-based defense systems to expose cybersecurity attacks. Headquartered in Santa Clara, California, it began its operations back in 2005, and has since become one of the powerhouses in the cybersecurity industry.
Shares of Palo Alto have dipped 8.9% so far this year, underperforming the broad market. The stock collapsed 28% in one session after the company lowered its full-year guidance in late February.
The guidance update came when Palo Alto Networks reported its 2Q results back on Feb. 20. The company posted revenue of $1.98 billion for the quarter, edging past analysts’ $1.97 billion estimate. Earnings per share came in at $1.46, outperforming Wall Street’s expected $1.30 per share.
However, the cybersecurity specialist also lowered its full-year billings forecast from the range of $10.70 - $10.80 billion to $10.10 - $10.20 billion, and simultaneously reduced its full-year revenue forecast to a range between $7.95 billion and $8.0 billion. This downward revision in guidance was attributed to a change in PANW's strategy that will negatively impact revenue and billings over the near term, as well as a shift toward AI-powered products.
High-Profile PANW Stock Bulls
Around the time of the earnings sell-off from PANW, the stock had won a high-profile endorsement from former Speaker of the House and current Rep. Nancy Pelosi (D-CA). In a disclosure filed on Feb. 26, Pelosi reported the purchase of PANW call options worth up to $1.25 million. The stock is now a smaller holding in the Unusual Whales Democratic Trades ETF (NANC), designed to track politicians' trading activity by party.
Over on the sell side of things, brokerage firm Argus recently maintained its “Buy” rating on PANW, and upped its price target for the stock from $290 to $336. In a note accompanying the price-target hike, analyst Joseph Bronner seemed to suggest the guidance-related selling was overdone.
"If we thought there was any deterioration in the demand environment for cybersecurity software or there was some competitive or execution issue, we might agree with the market," wrote the analyst. "However, the cybersecurity environment is, if anything, getting more toxic as generative AI may be used for both good and ill."
Bronner added that PANW's strategic shift should stop weighing on revenue and billings growth by July 2025. His new target implies expected upside of 25.1% from Monday's close.
What Do Analysts Think of PANW?
Overall, that bullish view from Argus is right in line with the rest of Wall Street.
Analysts have a consensus “Moderate Buy” on PANW stock, with a mean price target of $335.55 - signifying a potential upside of 24.9%. In total, 40 analysts are covering the shares, with 27 “Strong Buy” ratings, 2 “Moderate Buy” ratings, and the remaining 11 doling out a “Hold” on Palo Alto stock.
