On Monday, Rosenblatt Securities adjusted its price target for shares of Palo Alto Networks (NASDAQ:PANW), increasing it to $345 from the previous $300, while keeping a Neutral stance on the stock. The firm is preparing for Palo Alto Networks to announce its fourth-quarter and full-year 2024 financial results after the market closes today, with a conference call scheduled for 4:30 pm ET.
The analyst from Rosenblatt expects Palo Alto Networks to deliver a solid performance for the quarter, projecting a 10% increase in billings and year-over-year revenue. Despite a 2% decline anticipated in product revenue, the company is expected to see a significant 38% growth in Next-Generation Annual Recurring Revenue (ARR). The company's strong sales performance, particularly in Prisma Access and firewall appliances, has been noted as meeting partner expectations.
The report further highlights that Palo Alto Networks has experienced positive momentum in various segments. This includes the Security Operations (Sec Ops) sector with Cortex, where the company has reportedly displaced competitors like Carbon Black.
Moreover, the Prisma Cloud segment is showing quarter-over-quarter improvements. However, the Data Security Posture Management (DSPM) area, while still in its early stages, has not significantly impacted the overall performance.
Investors are said to be keenly awaiting the company's fiscal year 2025 outlook. Rosenblatt's financial model forecasts continued solid growth, with a 10% increase in billings and a 14% rise in revenue, albeit slightly below the street's expectations for billings. The model also predicts robust operating margins of 27.4% and a pro forma Earnings Per Share (EPS) of $6.19, which is marginally lower than the consensus estimate of $6.22.
The revised price target reflects Rosenblatt's anticipation of Palo Alto Networks' growth potential, although the firm has noted that the stock is trading at a premium with a 12x Enterprise Value/Revenue multiple and a 15% year-over-year growth rate, compared to its peer group's 6.6x multiple with 18% growth.
In other recent news, Palo Alto Networks has been the subject of several analysts' reviews. Baird raised the company's target price to $375, maintaining an Outperform rating, while highlighting a shift in investor focus towards Remaining Performance Obligations (RPO) and Free Cash Flow (FCF) guidance.
Evercore ISI maintained its Outperform rating and a price target of $385.00, citing a cautious short-term stance due to mixed signals from a quarterly partner survey and investor sentiment.
JPMorgan (NYSE:JPM) also maintained an Overweight rating on Palo Alto Networks, increasing the shares target to $365 due to strong Q4 demand. Scotiabank raised the price target for Palo Alto Networks to $385, maintaining a Sector Outperform rating, based on signs of a potential hardware refresh cycle for the company and stable or slightly improved business performance.
Citi raised Palo Alto Networks' stock target to $385, maintaining a Buy rating, based on expectations of a recovery in firewall sales and a prolonged period of hardware refresh cycles. These changes come ahead of the company's anticipated fourth-quarter fiscal year 2024 results, which are expected to provide further insights into its financial performance and strategic direction.
InvestingPro Insights
As Palo Alto Networks (NASDAQ:PANW) prepares to release its earnings, investors can gain further insights by considering some key metrics and InvestingPro Tips. With a market capitalization of $108.18 billion, the company's valuation is reflected in a P/E ratio of 43.09, suggesting that the stock is trading at a high earnings multiple.
This aligns with Rosenblatt Securities' observation of the stock's premium valuation compared to its peers. Moreover, Palo Alto Networks has shown a robust revenue growth of 20.05% over the last twelve months as of Q3 2024, indicating a strong sales performance that has been a focal point for analysts.
An InvestingPro Tip that resonates with the article's sentiment is the expectation of net income growth this year for Palo Alto Networks, which could be a driving factor for the company's solid performance. Furthermore, the company's significant annual recurring revenue growth, particularly in segments like Prisma Access and firewall appliances, is underscored by its position as a prominent player in the Software industry, another InvestingPro Tip that investors might find noteworthy.
For those seeking a more comprehensive analysis, InvestingPro offers additional tips, including insights on the company's liquidity, debt levels, and valuation multiples such as EBIT and EBITDA. There are 15 additional InvestingPro Tips available for Palo Alto Networks, which can be accessed for more in-depth investment strategies and company analysis.
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