Imperial Capital: Palo Alto Networks Worth $170/Share In A Year

In a report published Tuesday, Imperial Capital analyst Michael Kim reinitiated coverage of Palo Alto Networks Inc PANW with an Outperform rating and a price target of $170.

"Our valuation implies approximately 16% appreciation above recent levels. We believe PANW is strongly positioned to leverage its enterprise security platform and could drive expansion from the perimeter to the endpoint. In our view, the company could become a top-tier vendor in the enterprise security market, displacing legacy networking vendors and point solutions," Kim said.

In the report Imperial Capital explained the rationale as:

• Proven Technology Platform - Kim believes that the company has a "proven enterprise security platform" and it could extend its reach "from the perimeter to the endpoint."
• Expansive Market Opportunity - Palo Alto Networks is a leading vendor of next generation firewalls, which offer "significant technical advantages over legacy stateful inspection firewalls."
• Rising Customer Penetration - Kim believes that the company's enterprise security platform has "substantial flexibility to evolve with threats through the deployment of new subscription services on its devices."
• New Addressable Markets - The company may be able to expand into new markets, as highlighted by its acceleration into the endpoint security market through last year's acquisition of Cyvera.
• Effective Go-to-Market Strategy - Palo Alto Networks has demonstrated strong sales execution, reflecting the company’s effective go-to-market strategy and channel partnerships.