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Here's Why Citron's Andrew Left Sees Palo Alto Going To $170

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Here's Why Citron's Andrew Left Sees Palo Alto Going To $170

Citron Research, a notable short-seller, has from time-to-time made the bullish case for a stock. On Thursday, the firm's Andrew Left offered 10 reasons why he believes shares of the notable cybersecurity provider Palo Alto Networks Inc (NASDAQ: PANW) can rise to $170 per share from its current level of around $133.

Here is a summary of Left's bullish thesis, which coincides with the ongoing U.S. Senate hearing on cybersecurity.

Bull Case

    1. Cybersecurity is one of the best secular growth stories in technology as the threats posed to companies, governments and individuals is merely increasing and becoming more sophisticated.
    2. Palo Alto is a disruptor in the cybersecurity space with its unique architecture.
    3. Palo Alto is capturing up to 50 percent of the sector's market growth.
    4. Palo Alto's platform benefits from the "network effect" as new threats observed at just one client can be detected with solutions uploaded within minutes to every single client across the entire network.
    5. As a follow up to the prior point, Palo Alto's competitors would either need to start over from scratch or implement a "rip and replace" initiative to remain competitive.
    6. The company's margins of 75 percent are increasing as new customers in its SaaS model come with minimal incremental cost of goods sold.
    7. On a cash flow basis shares of Palo Alto are "very attractive."
    8. Investors are missing the fact that the company's subscriptions per product continue to grow at a time when its product sales are slowing. In other words, for each product Palo Alto sells there is more subscription revenue to be recognized.
    9. Palo Alto is only now entering an upgrade/replace/refresh cycle with its clients.
    10. The company is implementing shareholder friendly initiatives, including a $500 million stock buyback program in place.

At last check, shares of Palo Alto were up 2.79 percent at $131.68.

Posted-In: Andrew Left Citron Research CybersecurityNews Short Sellers Movers Tech Trading Ideas Best of Benzinga

 

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