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Palo Alto Networks Analyst Bullish Ahead Of Q1 Report, Says 'Secular Story Remains Well Intact'

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Palo Alto Networks Analyst Bullish Ahead Of Q1 Report, Says 'Secular Story Remains Well Intact'

Cybersecurity company Palo Alto Networks Inc (NYSE: PANW) is scheduled to release its fiscal year 2020 first-quarter results Monday after the market close, and one analyst at Morgan Stanley recommends buying shares heading into the print.

The Palo Alto Analyst

Keith Weiss maintained an Overweight rating on Palo Alto shares with a $315 price target.

The Palo Alto Thesis

Second-quarter channel checks remain supportive of Palo Network's position as a share gainer within the firewall market and suggest an increase in year-over-year product growth, Weiss said in a Tuesday note. (See his track record here.)

The firewall business was weak in the fiscal first quarter due to execution issues around balancing saleforce priorities, the analyst said. 

"Coupled with a strong and growing pipeline for Next Gen Security offerings (Prisma Cloud/Access, Cortex, Security Analytics), we think the secular story remains well intact for Palo Alto Networks."

Previewing the impending quarterly results, Weiss said he sees upside to the fiscal-second quarter estimates.

The expected sustained 20%-plus total billings growth throughout fiscal year 2020 and durable billings growth are underpriced in Palo Networks shares, the analyst said.

Morgan Stanley calls for a return to low-single digit year-over-year product revenue growth and 100%-plus year-over-year growth in Next Gen Security billings, helping drive a re-rating of shares toward its price target.

"At 17x our CY21e FCF vs. our model which looks for 20%+ FCF CAGR from FY19-22e, we see PANW as one of the more attractive risk/rewards in our universe," Weiss said.

Palo Alto Price Action

The stock was 0.8% higher at $249.22 at the close Tuesday.

Related Links:

Investors Sell Off Palo Alto Networks, But Analysts Like Long-Term Picture

Palo Alto Falls Despite Q4 Earnings Beat, Company To Acquire ZingBox

Latest Ratings for PANW

DateFirmActionFromTo
Apr 2020MizuhoMaintainsBuy
Mar 2020BTIGInitiates Coverage OnNeutral
Mar 2020Morgan StanleyMaintainsOverweight

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