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Palo Alto Networks, Inc NASDAQ:PANW Shares Could Be 43% Below Their Intrinsic Value Estimate

In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren’t available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period.

  • For example, a 12-day simple moving average for PANW is a sum of PANW’s closing prices over the last 12 days which is then divided by 12.
  • Based on our Palo Alto Networks stock forecast, Palo Alto Networks stock is currently not a good stock to buy.
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  • All of our research, including the estimates, opinions and information contained therein, reflects our judgment as of the publication or other dissemination date of the research and is subject to change without notice.

Palo Alto Networks exited fiscal 2023 with revenue growth of 25% to $6.9 billion. The company also saw a massive spike of 76% in adjusted earnings to $4.44 per share. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer.

Looking for a bull market? Jim Cramer says Palo Alto Networks is ‘kind of unstoppable’

The consensus 12-month PANW stock price target was $576.52 a share, representing a 12% upside potential based on the closing price of 512.5, as of 14 December 2021. The stock projection varied from the low of $350 to the high of $675. What’s more, the company’s full-year billings forecast of $10.95 billion also exceeded the $10.8 billion consensus estimate, which would be an increase of 19% over the prior year. It is also worth noting that Palo Alto’s remaining performance obligations (RPO) increased 30% year over year to $10.6 billion, exceeding the growth in its actual revenue. The solid growth in this metric means that Palo Alto’s revenue pipeline expanded impressively, as the RPO refers to the total value of future contracts that are yet to be fulfilled. Ultimately, while Palo Alto Networks possesses the fundamentals of a strong business, its future prospects hinge on addressing critical issues surrounding net income and mitigating these risks.

  • However, there is a good chance that Palo Alto could clock faster growth thanks to a solid customer base that’s spending more money on its offerings.
  • So, even though Palo Alto stock may seem richly valued now, it could justify its valuation in the long run with healthy growth and stock upside.
  • According to the prediction, the price of PANW stock will increase by 1.46% in the next day.

This platform allows businesses to detect and respond to cyber threats stopping a hacker before they reach critical infrastructure. As far as the long-term Palo Alto Networks stock forecast is concerned, here’s what our predictions are currently suggesting. These predictions are based on the 10-year average growth of PANW. The Palo Alto Networks stock price forecast for the next 30 days is a projection based on the positive/negative trends in the past 30 days. Based on the current trend the price of PANW stock is predicted to rise by 0.25% tomorrow and gain 1.13% in the next 7 days.

Analyst’s Opinion

Palo Alto will start 2030 at $473, then soar to $483 within the first half of the year, and finish 2030 at $493. In this period, the Palo Alto price would rise from $447 to $560, which is +25%. Palo Alto will start 2030 at $447, then soar to $456 within the first half of the year, and finish 2030 at $466. In this period, the Palo Alto price would rise from $443 to $555, which is +25%. Palo Alto will start 2030 at $443, then soar to $452 within the first half of the year, and finish 2030 at $462.

Palo Alto Networks updated its FY 2024 earnings guidance on Friday, August, 18th. The company provided earnings per share (EPS) guidance of $5.27-$5.40 for the period, compared to the consensus EPS estimate of $4.98. The company issued revenue guidance of $8.15 billion-$8.20 billion, compared to the consensus revenue estimate of $8.38 billion. Some traders try to identify candlestick patterns when making a stock price prediction to try and get an edge over the competition. Some candlestick formations are seen as likely to forecast bullish price action, while others are seen as bearish.

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Furthermore, one of the reasons for the “Hold” rating, rather than a “Sell,” is the observation in the “financials” section, where the company possesses a substantial free cash flow of $2.7 billion. The projected free cash flows are all below $300 million in 2023. This is due to the exclusion of $1.07 billion in stock-based compensation, which, while not constituting an outflow of cash, could dilute the fair value if those stocks are subsequently sold by employees.

In conclusion, the evaluation of Palo Alto Networks reveals a multifaceted outlook. The company exhibits several strengths, including consistent double-digit revenue growth and strong free cash flows, which position it well within the competitive cybersecurity landscape. However, the persistently low net income raises concerns about the sustainability of its valuation. At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors.

The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities. Assuming that Palo Alto does hit that mark in three years and maintains its current how to choose broker platform for day trading sales multiple of 11, its market capitalization could increase to $125 billion. However, there is a good chance that Palo Alto could clock faster growth thanks to a solid customer base that’s spending more money on its offerings. Palo Alto Networks’s earnings are expected to grow from $2.51 per share to $3.34 per share in the next year, which is a 33.07% increase.

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The company has offices and infrastructure in more than 150 countries and has offices and operations in key markets worldwide. Palo Alto Networks’ global presence allows it to serve diverse customers and tap into new markets for growth. Always remember that your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio, and how comfortable you feel about losing money. Palo Alto Networks faces competition from other key players in the cybersecurity market such as Cisco. Ever since the pandemic struck in the first quarter of 2020, companies have made working from home a necessity.

However, a DCF is just one valuation metric among many, and it is not without flaws. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you. However, it’s important to note that this scenario may not align with analysts’ expectations. As previously mentioned, analysts anticipate a net income of $385.37 million for 2024, and for this scenario to come to fruition, Palo Alto would need to achieve a net income of $1 billion. This amounts to a substantial 159.4% increase over what analysts are forecasting for 2024.

It’s important to reach your own conclusion on a company’s prospects and the likelihood of achieving analysts’ targets. The PC maker also forecast fiscal 2024 free cash flow of $3.1 billion to $3.6 billion and expects to return about 100% of it to shareholders through dividends and share repurchases. As such, it won’t be surprising to see Palo Alto exceed its fiscal 2024 revenue forecast of $8.15 billion to $8.20 billion, which would translate into revenue growth of 19% to 20% over last year.

We do this to reflect that growth tends to slow more in the early years than it does in later years. In conclusion, it’s important to acknowledge that Palo Alto is a robust business, characterized by double-digit revenue growth and healthy free cash flows within the current context. However, it’s crucial to recognize that unless the issue of net income is addressed, the stock may have already reached its future value for 2028. Beyond this point, predictions become speculative, particularly regarding employee decisions to cash in their stocks. HP Inc. said the company sees 2% to 4% long-term annual revenue growth, with earnings per share growth in the high single digit percentage range. The PC and printer company made the forecast Tuesday afternoon at a meeting with securities analysts in Palo Alto, Calif.

Palo Alto Networks’ growth strategy focuses on expanding its product offerings and increasing its market share in the cybersecurity market. The company has made a number of strategic acquisitions in recent years, including Demisto, a security orchestration and automation company and Twistlock, a container security company. These acquisitions have allowed Palo Alto Networks to broaden its product portfolio and enter new markets. In addition to its NGFW product line, Palo Alto Networks offers a range of cloud-based security solutions. Its Prisma Cloud platform provides comprehensive security for cloud-based applications and data. Palo Alto Network has also developed the Cortex XDR platform, which provides endpoint detection and response (EDR) capabilities.

When using the forecast data, the investor assumes all financial risks. The pandaforecast.com portal is not responsible for the loss of your money in the stock market
as a result of using the information contained on the site. Palo Alto provides its products to a variety etoro forex broker review of industries around the world. For Palo Alto Networks stocks, the 200-day moving average is the support level today. The company’s mission is to protect its customers from cyber threats by providing innovative security solutions that are easy to use and deploy.

These tools can roughly be divided into indicators and chart patterns. The value of shares and ETFs bought through a share dealing account can fall as well as rise, which could mean getting back less than you originally put in. According to the data compiled by MarketBeat, as of 15 December 2021, out of 31 analysts covering the stock, 28 rated it a ‘buy’, two a ‘hold’ and a ‘sell’. According to Arora, the stock’s inclusion in the Nasdaq-100 affirms the company’s “transformation into the cybersecurity partner of choice for organisations worldwide”.

This demand is expected to continue, with the global cybersecurity market size forecast to grow to $345.4bn by 2026, according to a report compiled by Statista. Revenue has also demonstrated upbeat performance in the last three quarters. Revenue increased 24% year-over-year to $1.1bn in the fiscal third quarter 2021, trade360 broker review and added 28% and 32%, on an annual basis, to $1.2bn in each in the two following quarters, respectively. Palo Alto Networks stock forecasts are adjusted once a day based on the closing price of the previous trading day. For Palo Alto Networks stocks, the 200-day moving average is the resistance level today.