Shares of Palo Alto Networks Inc (NASDAQ:PANW) tanked in early trading on Wednesday, despite an upbeat fiscal third-quarter report.
Here are some key analyst takeaways of the cybersecurity innovator’s finances:
- DA Davidson analyst Rudy Kessinger reiterated a Buy rating, while raising the price target from $190 to $345.
- Needham analyst Mike Cikos maintained a Buy rating, while lifting the price target from $200 to $350.
- BTIG analyst Gray Powell reaffirmed a Buy rating, while taking the price target higher from $268 to $333.
- Cantor Fitzgerald analyst Yi Fu Lee reiterated a Buy rating, while raising the price target from $270 to $340.
- Rosenblatt Securities analyst Catharine Trebnick maintained a Buy rating, while lifting the price target from $275 to $355.
- Scotiabank analyst Patrick Colville reaffirmed a Sector Outperform rating, while taking the price target higher from $180 to $320.
- Loop Capital Markets analyst Yun Kim reiterated a Hold rating and price target of $290.
Check out other analyst stock ratings.
DA Davidson: Palo Alto Networks reported revenues ($3.002 billion), operating profit ($814 million) and earnings of 85 cents per share. It topped consensus of $2.943 billion, $764.3 million and 80 cents per share, respectively. The stock came under pressure following the results due to "sky-high expectations," Kessinger said in a note.
The company witnessed platformization momentum, adding around 110 net new platformizations among their top 5,000 customers in the fiscal third quarter. Management guided to revenues and earnings for the fiscal fourth quarter at $3.35 billion and 97 cents per share, higher than consensus of $3.28 billion and 94 cents per share, he noted.
Needham: Palo Alto Networks reported "impressive" results, which came in higher than elevated expectations, Cikos said. Both CyberArk and Chronosphere exceeded management’s expectations in the first quarter after closing these acquisitions, he added.
NGS ARR (next-generation security annual recurring revenue) grew 60% year-on-year to $8.1 billion, helped by Chronosphere’s ARR expanding more than 50% sequentially to surpass $300 million, the analyst noted. "In an industry littered with point solutions and use-case specific companies, Palo Alto Networks stands out as one of a few differentiated, platform vendors," he further wrote.
BTIG: Palo Alto Networks' next-gen firewall bookings growing around 40% year-on-year, Powell said. Management indicated that AI-driven traffic growth is likely to be "a multi-year structural tailwind for network security," he added.
While management raised its fiscal 2026 NGS ARR outlook by $355 million to $8.925 billion, "some investors are questioning the organic component of PANW's guidance raise," the analyst wrote. Following a call with management, Powell estimates by a "rough math" that the company raised the organic or core NGS ARR guidance by $40 million.
Cantor Fitzgerald: Palo Alto Networks "comfortably" outperformed expectations for the quarter, Lee said. He noted the company beat topped consensus estimates with:
- 2% upside in revenue
- 6.5% beat in operating income
- 7.8% upside in free cash flows
The company generated durable revenue growth, driven by the adoption of frontier AI models, which triggered "a greater need for network traffic inspection," the analyst wrote. This resulted in NSG ARR growing 60% year-on-year to $8.13 billion, he further stated.
Rosenblatt Securities: Palo Alto Networks delivered its strongest quarterly outperformance in company history, Trebnick said. The company's results were above guidance across all key metrics, "driven by accelerating organic bookings, continued platformization momentum, and upside from recently closed acquisition," she wrote.
The "standout" figure was its NGS ARR, which grew 60% year-on-year to reach $8.13 billion, including $1.63 billion from the CyberArk and Chronosphere acquisitions, the analyst stated. While Palo Alto Networks' total RPO (remaining performance obligations) grew 36% year-on-year to $18.4 billion, organic RPO grew 22% year-on-year to $16.6 billion, she further noted.
Scotiabank: Palo Alto Networks reported a healthy organic performance, with a strong core firewall business, Colville said.
The raised guidance reflects the company being considered as a "Fort Knox" stock amid the entry of new frontier models, like Claude Mythos and GPT-5.5-Cyber, which can "find and exploit vulnerabilities at a much faster speed and scale," he stated.
New AI-based solutions have sensors across endpoints, firewalls, cloud, and browsers, which makes platform-based security more critical, but is not yet driving a real-time increase in spend, indicating that "the kicker is to come for Palo Alto Networks," the analyst stated.
Loop Capital: On an organic basis, Palo Alto Networks' revenue, NGS ARR, and RPO growth were "somewhat lackluster," when compared to the growth trajectory in prior quarters. This implies there was "no incremental tailwind in its business from Mythos-related events," Kim said.
Much of the upside was driven by the contributions from the CyberArk and Chronosphere acquisitions, the analyst stated. While Palo Alto Networks' hardware firewall business generated strong results, this was in-line with the current industry trend, highlighting concerns around the sustainability of the current growth, he further noted.
PANW Price Action: Shares of Palo Alto Networks had declined by 5.45% to $280.98 at the time of publication on Wednesday.
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