Palo Alto Networks Security Platform Has Industry Disruptive Potential

With the missteps of fiscal year 2017 in the rearview, Morgan Stanley sees a bright future ahead for Palo Alto Networks Inc PANW.

“With execution issues behind them, expanded sales capacity against easier comps, and a conservative bar for FY18 we believe it’s time to rebuild positions in PANW,” said Morgan Stanley analyst Keith Weiss (see his track record here).

With an attractive risk/reward scenario present for the cyber-security firm, Morgan Stanley upgraded the company from an Equal-Weight to an Overweight rating and bumped its price target from $150 to $185.

With easier comps ahead, a low bar for product revenue, alongside increasing credibility of the security platform story, Weiss is increasingly confident Palo Alto Networks can deliver 20-percent free cash flow growth.

Weiss has argued in the past that an integrated security platform is needed to drive more efficiency and effectiveness out of cyber-security investments. Palo Alto has built this platform from the ground up and it could potentially to have industry disruptive potential.

“We believe Palo Alto Network is one of the best-positioned vendors to execute on that platform story, as they consolidate network security spend and increasingly end-point security and security analytics,” said Weiss.

Palo Alto Networks moved up over 3 percent following the upgrade.

Related Link: Analyst: Palo Alto Networks Is No Longer A 'Show Me' Story