FBR Believes Palo Alto Remains 'The Clear Winner In Cybersecurity' Into 2016

• In a report issued Thursday, FBR analyst Daniel H. Ives reiterated an Outperform rating on Palo Alto Networks Inc PANW, raising his price target by $25 to $235.
• The firm also added the stock to its list of Top Picks.

FBR sees substantial multiple expansion ahead, as the Street starts to appreciate the company's ramping margins and free cash flow into the second half of fiscal 2016 and fiscal 2017, and rerates the company “on its FCF trajectory.”

After chatting with customers and partners ahead of 2016, the analysts believe the “sophisticated threat environment is front and center on the minds of CIOs, with Palo Alto's newer/updated (e.g., Traps) and existing (e.g., WildFire, NGFW appliances) products for the enterprise garnering strong interest as it remains early innings of a major legacy solution upgrade cycle.”

Related Link: Why Palo Alto Is A 'Best Idea' For Imperial Capital

Based on recent strong results and continued positive checks, the analysts think Palo Alto has large “cross-sell opportunities with its next-generation firewall and subscription services (e.g., Wildfire) at the core, while newer technologies (big data analytics for security) are also adding tailwinds.”

In a nutshell, Ives and his team believe the company is “doing the right things at the right time and is poised to be ‘the major winner’ in the estimated $40 billion cybersecurity market opportunity.”

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.