Palo Alto Networks’ (PANW) operational excellence has propelled the company to the top rungs of network security players in the world. Furthermore, the pandemic has provided a strong impetus to the demand for the company’s products. (See Analysts’ Top Stocks on TipRanks)
The demand for cloud-based security is expected to remain strong over the next few years, as cybercrimes become increasingly sophisticated and advanced. A recent Gartner report found that global spending on security and risk management is on track to grow 12.4% year-over-year and reach $150 billion by the end of 2021. This gives us a rough idea of the healthy environment that is allowing Palo Alto to thrive.
Partnerships Bode Well
The remote-working trend led to growth in the adoption of Palo Alto’s next-generation security platforms because of the greater need for stronger security. Palo Alto’s security platforms like Strata, Prisma, and Cortex are continuing their strong momentum.
Partnerships have been a key growth strategy for the company. Partnerships with the likes of VMware (VMW), Aruba Networks, Splunk (SPLK), and Citrix (CTXS) are bringing in more customers for Palo Alto and boosting the top line.
Moreover, the company recently expanded its partnership with CDW Corporation (CDW) to enable Canadian companies to secure their hybrid workforces.
Significantly, earlier this year, the company created the latest version of its NextWave Technology Partner Program, through which other companies can join as a partner.
Furthermore, Palo Alto delivered strong fiscal Q1 results on November 18, with both the top and bottom lines recording a year-over-year increase. Sustained focus on product innovation, subscription-based services, and platform integration pulled in more key companies to sign security partnership deals with Palo Alto.
Experts are Positive
Yesterday, Argus Research analyst Joseph Bonner reiterated a Buy rating on the company’s stock and raised his price target to $620 from $530. He noted that numerous cyber breaches that occurred recently have reinforced the importance of stronger security for the private as well as the public sector.
The Wall Street analyst consensus also has an optimistic stance on Palo Alto, with a Strong Buy rating based on 25 Buys, 3 Holds, and 1 Sell. The average Palo Alto price target of $595 indicates a downside potential of 11.63%.
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Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.
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