Deutsche Bank Sees Buying Opportunity in Palo Alto Networks with Legal Risk Removed

In a report published Wednesday, Deutsche Bank analyst Karl Keirstead reiterated a Buy on Palo Alto Networks, Inc. PANW and raised the price target from $90.00 to $95.00 following the litigation settlement. Litigation Settlement In Palo Alto Networks press release on the company's third quarter results, the company announced that it has reached a settlement with Juniper Networks JNPR. The press release states, “the terms [of the settlement] of which provide that both parties will dismiss all litigation; both parties will license the patents at issue in all outstanding suits to each other for the life of the patents; both parties will also enter into a covenant not to sue each other for patent infringement for eight years; and Palo Alto Networks will pay Juniper Networks a one-time settlement amount of approximately $175 million, consisting of $75 million in cash, approximately $70 million in shares of common stock and a warrant to purchase approximately $30 million of common stock.” Deutsche Bank Suggests Buying Opportunity with Legal Risk Removed Analyst Keirstead remarked that many investors liked the company's “fundamental story” but were unwilling to purchase shares with the legal risk. Deutsch Bank wrote, “With this [legal risk] removed, what is the stock now worth? On a positive note, PANW just posted another 45%-50% total revs/ billings growth quarter, overall security IT demand trends are solid and PANW is ramping its mix of high-growth offerings (WildFire and other subscriptions, end point solutions). Skeptics point to the rapidly-changing nature of the security industry, the high license mix (56% of total revs) and PANW's exposure to the mature firewall industry.” Shares of Palo Alto Networks closed at $69.51. The stock is currently trading at $75.95, up 9.26 percent.