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Palo Alto Networks
(NASDAQ:PANW)
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Rating:70Outperform
Price Target:
$461.00
▲(35.63% Upside)
Action:Upgraded
Date:09/15/26
The score is primarily supported by strong cash-flow generation and an improved balance sheet, reinforced by an upbeat earnings call and constructive FY2027 guidance. Offsetting these positives are the sharp 2026 profitability compression and an extremely high P/E that raises downside risk if margins or growth disappoint; technical signals are supportive but not strongly bullish due to mixed momentum.
Positive Factors
Recurring subscription model
A subscription-led model creates recurring revenue through software, cloud services, maintenance, and support. Multi-year agreements, renewals, and expansion across additional modules can improve revenue visibility and deepen customer relationships over the next several quarters.
Negative Factors
Sharp profitability compression
The steep decline in net margin weakens confidence in near-term earnings quality and shows that revenue growth is not currently translating consistently into bottom-line expansion. Sustained margin recovery will be important for earnings stability and efficient capital deployment.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring subscription model
A subscription-led model creates recurring revenue through software, cloud services, maintenance, and support. Multi-year agreements, renewals, and expansion across additional modules can improve revenue visibility and deepen customer relationships over the next several quarters.
Read all positive factors
Palo Alto Networks Key Performance Indicators (KPIs)
Any
Gross Profit by Segment
Reveals profitability across different business units, highlighting which segments are driving earnings and where there may be opportunities or challenges.
Reveals profitability across different business units, highlighting which segments are driving earnings and where there may be opportunities or challenges.
Data provided by:
The Fly
The FlyPalo Alto Networks (PANW) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$342.56B
Dividend YieldN/A
Average Volume (3M)6.18M
Price to Earnings (P/E)910.4
Beta (1Y)1.42
Revenue Growth24.49%
EPS Growth-68.55%
CountryUS
Employees21,921
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)0.46
Shares Outstanding818,000,000
10 Day Avg. Volume4,943,438
30 Day Avg. Volume6,182,841
Financial Highlights & Ratios
PEG Ratio-9.87
Price to Book (P/B)9.04
Price to Sales (P/S)21.65
P/FCF Ratio60.43
Enterprise Value/Market Cap0.79
Enterprise Value/Revenue23.57
Enterprise Value/Gross Profit33.50
Enterprise Value/Ebitda175.71
Forecast
1Y Price Target
$414.13Price Target Upside21.84% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering42
EPS Forecast (FY)4.19
Revenue Forecast (FY)$14.17B
Palo Alto Networks Business Overview & Revenue Model
Company Description
Palo Alto Networks, Inc. is a global leader in providing advanced cybersecurity solutions. The company's core product line includes both hardware and software-based firewalls. It also offers Panorama, a sophisticated security management platform d...
How the Company Makes Money
Palo Alto Networks primarily generates revenue through subscriptions and support, complemented by product (hardware) sales and professional services. Subscriptions and support are the company’s core revenue engine and include (1) recurring softwar...
Palo Alto Networks Earnings Call Summary
Earnings Call Date:Sep 01, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Nov 12, 2026
Earnings Call Sentiment Positive
The call was strongly optimistic, characterized by record financial performance, accelerating platformization, rapid growth in Prisma AIRS, XSIAM, SASE, and observability, successful acquisition integration, and positive fiscal 2027 guidance. The main challenges were lower gross margins, expected cloud hosting-cost growth, persistent hardware commodity costs, the fading impact of a large Chronosphere migration, and the time required for customers to modernize legacy environments. Highlights significantly outweighed the lowlights.Positive Updates
Record Q4 Execution Across All Financial Metrics
Palo Alto Networks exceeded its guidance across every financial metric in Q4, with bookings momentum accelerating for the second consecutive quarter.
Negative Updates
Gross Margin Decline
Q4 total gross margin was 74.8%, down 100 basis points year over year. Fiscal 2026 gross margin was 75.8%, down 60 basis points year over year.
Read all updates
Q4-2026 Updates
Positive
Negative
Record Q4 Execution Across All Financial Metrics
Palo Alto Networks exceeded its guidance across every financial metric in Q4, with bookings momentum accelerating for the second consecutive quarter.
Read all positive updates
Company Guidance
For fiscal first quarter 27, Palo Alto Networks expects NGS ARR of $9.54 billion to $9.56 billion or 63% growth, RPO of $20.8 billion to $20.9 billion or 34% to 35% growth, revenue of $3.3 billion to $3.31 billion or 33% to 34% growth, fully diluted share count of 37 to 44 million shares, and diluted non GAAP EPS in the range of $0.96 to $0.98 per share; for fiscal year 2027, it expects NGS ARR of $11.075 billion to $11.175 billion or 22% to 23% growth, RPO of $25.2 billion to $25.4 billion or 19% to 20% growth, revenue of $14.1 billion to $14.2 billion or 23% to 24% growth, operating margin of 29.5%, diluted non GAAP EPS in the range of $4.16 to $4.19 per Fully diluted share count of 844 to 847 million shares, and adjusted free cash flow margin of 38%; it expects 60% to 61% of the net new NGS ARR to fall in the second half of FY 27, network and AI security revenue growth of low double digits year over year, Cortex revenue up approximately 30% year over year, and IDERA revenue of approximately $1.5 billion, representing pro form a growth of high teens to 20%. year over year, and it has a target of $20 billion in NGS ARR by fiscal year 2030 and a 40% free cash flow margin target in fiscal 2028.Palo Alto Networks Financial Statement Overview
Summary
Income Statement
58
Neutral
Balance Sheet
72
Positive
Cash Flow
84
Very Positive
| Breakdown | Jul 2026 | Jul 2025 | Jul 2024 | Jul 2023 | Jul 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 11.48B | 9.22B | 8.03B | 6.89B | 5.50B |
| Gross Profit | 8.08B | 6.77B | 5.97B | 4.98B | 3.78B |
| EBITDA | 1.39B | 1.94B | 1.28B | 869.00M | 95.60M |
| Net Income | 307.00M | 1.13B | 2.58B | 439.70M | -267.00M |
Balance Sheet | |||||
| Total Assets | 48.46B | 23.58B | 19.99B | 14.50B | 12.25B |
| Cash, Cash Equivalents and Short-Term Investments | 3.07B | 2.90B | 2.58B | 2.39B | 3.63B |
| Total Debt | 2.50B | 338.20M | 1.34B | 2.27B | 3.95B |
| Total Liabilities | 20.97B | 15.75B | 14.82B | 12.75B | 12.04B |
| Stockholders Equity | 27.49B | 7.82B | 5.17B | 1.75B | 210.00M |
Cash Flow | |||||
| Free Cash Flow | 4.11B | 3.47B | 3.10B | 2.63B | 1.79B |
| Operating Cash Flow | 4.55B | 3.72B | 3.26B | 2.78B | 1.98B |
| Investing Cash Flow | -3.10B | -2.20B | -1.51B | -2.03B | -933.40M |
| Financing Cash Flow | -1.20B | -778.90M | -1.34B | -1.73B | -806.60M |
Palo Alto Networks Technical Analysis
Positive
339.90
Price Trends
370.85
Positive
337.14
Positive
255.92
Positive
Market Momentum
13.95
Negative
63.07
Neutral
60.68
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PANW, the sentiment is Positive. The current price of 339.9 is below the 20-day moving average (MA) of 389.72, below the 50-day MA of 370.85, and above the 200-day MA of 255.92, indicating a bullish trend. The MACD of 13.95 indicates Negative momentum. The RSI at 63.07 is Neutral, neither overbought nor oversold. The STOCH value of 60.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PANW.
Palo Alto Networks Risk Analysis
Palo Alto Networks disclosed 51 risk factors in its most recent earnings report. Palo Alto Networks reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Palo Alto Networks Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $281.62B | 7,813.64 | 1.29% | ― | 24.30% | ― | |
78 Outperform | $142.89B | 68.09 | 187.95% | ― | 18.77% | 12.93% | |
72 Outperform | $14.01B | 13.86 | 36.43% | ― | 4.64% | 25.51% | |
70 Outperform | $342.56B | 910.39 | 1.68% | ― | 24.49% | -68.55% | |
65 Neutral | $38.11B | -599.31 | -2.76% | ― | 25.42% | -47.39% | |
64 Neutral | $9.14B | -26.01 | -23.16% | ― | 21.09% | 23.48% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
PANW
Palo Alto Networks
418.78
205.50
96.35%
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CRWD
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275.04
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S
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Palo Alto Networks Corporate Events
Business Operations and StrategyExecutive/Board ChangesRegulatory Filings and Compliance
Palo Alto Networks Updates Executive Severance and Governance Policies
Neutral
Aug 21, 2026
On August 20, 2026, Palo Alto Networks’ board approved an Executive Change in Control and Severance Policy that formalizes severance, health benefit continuation, and equity-vesting protections for senior leaders, including CEO Nikesh Arora ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.