Palo Alto Networks: Strong Growth Potential and Financial Stability Justify Buy Rating

Palo Alto Networks (PANW – Research Report), the Technology sector company, was revisited by a Wall Street analyst today. Analyst Joseph Gallo from Jefferies maintained a Buy rating on the stock and has a $240.00 price target.

Joseph Gallo has given his Buy rating due to a combination of factors that highlight Palo Alto Networks’ potential for growth and financial stability. The analyst points to the company’s strong year-over-year growth in remaining performance obligations (RPO) and annual recurring revenue (ARR), which are crucial indicators of future revenue streams. Gallo also notes Palo Alto Networks’ ability to meet its free cash flow (FCF) margin guidance for fiscal year 2025, which has been a significant concern among investors but appears achievable based on recent management insights.
Furthermore, the demand environment for cybersecurity products remains stable, with enterprise customers outperforming small and medium businesses, yet showing signs of improvement. Despite uncertainties in federal spending, the overall market sentiment is optimistic, especially with the new administration’s focus on technology. The combination of these factors, alongside the company’s strategic visibility into billings durations and solid RPO growth, supports the analyst’s confidence in Palo Alto Networks achieving approximately $4.5 billion in FCF by fiscal year 2027, justifying the Buy rating.

Gallo covers the Technology sector, focusing on stocks such as Okta, Palo Alto Networks, and CyberArk Software. According to TipRanks, Gallo has an average return of 18.8% and a 76.40% success rate on recommended stocks.

In another report released today, KeyBanc also maintained a Buy rating on the stock with a $240.00 price target.