How Much Is Palo Alto Networks Worth? Barclays And Nomura Differ

Two reports published Tuesday morning looked at Palo Alto Networks Inc PANW. Barclays analysts Raimo Lenschow and Saket Kalia rate the stock at Overweight and fix a $170 price target. Nomura's Frederick Grieb sees it as a Buy and sets the price target to $165.

Barclays

Barclay's positive rating and price target is based on Palo Alto's solid quarter. Revenue rose 54 percent year-over-year and billings grew 52 percent. This makes it the third straight quarter of above-50 percent expansion in both metrics. "Profitability came in ahead, primarily on gross margins, and cash flow also was strong despite a one-time $13M payment related to Cyvera," the report explained.

Guidance for the third quarter calls for 45-48 percent growth. "With the margin expansion story intact for the next 1-2 years," the firm remains Overweight. The price target increase is based on free cash flow, as they think "cash flow generation is better at capturing the growth in subscriptions and margin expansion."

Nomura

Nomura's Grieb also highlighted the strong results (especially billings) and consequently raised his revenue estimates for fiscal 2015 and fiscal 2016. The analyst also likes the guidance for revenue and margins, and expects "strong growth and operating margin expansion from Palo Alto."

After strong results, the firm is ameliorating its estimates and boosting its target price to $165, from $145.

Shares of Palo Alto Networks recently traded at $146.25, nearly unchanged after falling lower earlier in the day.