Oppenheimer Sees $196 For Palo Alto Networks After Meeting With Management

• The share price of Palo Alto Networks Inc PANW have appreciated 30.73 percent over the past one year, from a low of $122.08 on January 15, 2015.
• Oppenheimer’s Shaul Eyal has reiterated an Outperform rating and price target of $196 on the company.
• Following meetings with management, Eyal believes that the company is well positioned to benefit from another year of robust growth.

Analyst Shaul Eyal mentioned that the bullish stance on Palo Alto was driven by several factors, including the company’s “expanding customer base to which more products could be pushed, as well as its high-end appliances that were capable of driving product reach “higher and deeper within the enterprise as well as a growing TAM.”

Eyal also expressed optimism regarding Palo Alto’s clear road map, which supports a gradual shift toward higher subscription contribution and profitability, the company’s growing footprint in the international markets and the refresh cycle for the 2009-2010 appliances, which could prove to be another growth driver.

In addition, Eyal expressed confidence regarding the company’s ability to sustain and expand its non-GAAP operating margins toward 22-25 percent by the end of FY16, saying that the combination of the continuing double digit revenue growth, higher subscriptions contribution and moderating opex were the key drivers.

“Despite a brutal YTD market start, PANW carries the necessary ingredients to benefit from another year of strong growth as it continues to gain market share while expanding margins,” Eyal added.