Palo Alto Networks Delivers 'Solid Finish' To Year, 10 Analysts Raise Forecasts

Palo Alto Networks reported strong earnings and revenue, and analysts are optimistic about its platformization strategy and growth potential.

Shares of Palo Alto Networks Inc PANW were climbing in early trading on Tuesday.

The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

• KeyBanc Capital Markets analyst Eric Heath maintained an Overweight rating, while raising the price target from $380 to $400.
• Cantor Fitzgerald analyst Yi Fu Lee reiterated an Overweight rating, while lifting the price target from $350 to $400.
• Stifel analyst Adam Borg reaffirmed a Buy rating, while raising the price target from $360 to $385.
• RBC Capital Markets analyst Matthew Hedberg maintained an Outperform rating, while lifting the price target from $390 to $410.
• Needham analyst Matt Dezort reiterated a Buy rating, while raising the price target from $345 to $385.
• Piper Sandler analyst Rob Owens reaffirmed a Neutral rating, while lifting the price target from $300 to $330.
• Goldman Sachs analyst Gabriela Borges maintained a Buy rating, while raising the price target from $330 to $376.
• BMO Capital Markets analyst Keith Bachman reiterated an Outperform rating, while lifting the price target from $334 to $390.
• Truist Securities analyst Joel Fishbein reaffirmed a Buy rating, while raising the price target from $350 to $400.
• Oppenheimer analyst Ittai Kidron maintained an Outperform rating, while lifting the price target from $390 to $410.
• JMP Securities analyst Trevor Walsh reiterated a Market Outperform rating and price target of $380.
• WestPark Capital analyst Paul Rodriguez reaffirmed a Hold rating on the stock.

Check out other analyst stock ratings.

KeyBanc: Palo Alto Networks reported its fiscal fourth-quarter billings at $3,502 million. This represents 11% year-on-year growth, beating consensus of $3.45 billion, Heath said in a note. Revenues came in at $2.19 billion, topping expectations of $2,161 million, he added.

Management's RPO guidance for fiscal 2025 of $15.2 billion to $15.3 billion missed consensus of $15.4 billion. Management did not indicate that the CrowdStrike Holdings Inc CRWD outage had an impact on bookings in the fourth quarter "but does expect it to help its momentum in Cortex XDR," he further wrote.

Cantor Fitzgerald: Palo Alto Networks delivered "a solid finish to the year end," with higher-than-expected revenues, billings, and operating income, Lee said. Management's fiscal 2025 guidance was also "solid," he added.

More importantly, the Platformization Strategy is proving to be more than just a buzzword, as the company has added over 90 new platformization customers in the fiscal fourth quarter, the analyst stated. "We are monitoring for any indication of PANW’s pipeline building activities at the expense of CrowdStrike’s outage incident from last month and for potential conversion activities benefiting the Cortex XSIAM segment," he further wrote.

Stifel: Palo Alto Networks delivered "a solid print," with 34% year-on-year growth in NGS-ARR (Next-Generation Security-Annual Recurring Revenue), Borg said. "Management saw continued traction with its platformization efforts as well as newer focus areas such as Cortex, Prisma Cloud, and AI," he added.

"While there are a number of moving parts to the print, we generally view the guidance as better than feared," the analyst wrote. The company has several drivers to sustain double-digit revenue growth and improving profitability, he further stated.

RBC Capital Markets: "We thought the quarter represented a strong finish to the FY with momentum building into FY/25," Hedberg wrote in a note. The company's platformization made progress in the back half of the year, he added.

The guidance was transitioned from billings to RPO, which "should better align with the underlying trends," the analyst stated. "Initial FY/25 guidance was slightly ahead and should set a positive tone as we think further upside could be likely," he further wrote.

Needham: Billings grew by 11% year-on-year to $3.5 billion, while revenues grew by 12% to $2.19 billion, "driven by better-than-expected Product and Services," Dezort said.

"Platformizations accelerated with +90 added in FY4Q, bringing the total to >1,000 now with ARPU among the cohort growing DD%," the analyst wrote. Management issued RPO guidance for the first time and it came "modestly below" expectations, he further stated.

Piper Sandler: Platformization momentum accelerated into the yearend, with the number of platformization deals rising by more than 50% in the fiscal fourth quarter, Owens said. He added, however, and this was "not enough to drive an inflection in RPO, which saw a three point growth decel Q/Q."

The new guidance implies RPO growth of around 20% in fiscal 2025, while requires "further acceleration in platformization momentum, as we see it," the analyst stated.

Goldman Sachs: NGS ARR is expected to be between $4.42 billion and $4.47 billion, representing 28-30% growth, Borges said. "This includes the contribution of tens of millions of revenue from the agreed acquisition of QRadar from IBM IBM, which is expected to close in late September per management," she added.

Palo Alto will discontinue providing billings guidance. But management indicated that billings would growt by 12% in fiscal 2025, "if the mix between financed deals and billings programs was the same as in FY24," the analyst stated.

BMO Capital Markets: The company's billings growth of 10.8% year-on-year marked an accelerated from 3.4% in the previous quarter, Bachman said.

"Management stated that the macro was stable in the July quarter and added that CRWD's IT outage delayed some deals, though we think PANW was able to close most affected deals by quarter-end," the analyst wrote. Palo Alto Networks reported over 90 new consolidation deals in the July quarter, versus 65 in the previous quarter, he added.

Truist Securities: The company's non-GAAP operating margin came in at a higher-than-expected 26.9%, "showing the company’s commitment to profitability and inherent leverage in the business model," Fishbein said. Palo Alto Networks reported upbeat results on the back of "its continued shift to platformization," he added.

"We note strength in its ARR, up 43% YoY, as well as RPO, up 20% YoY," the analyst wrote. Management's guidance for fiscal 2025 and their strong profitability outlook indicate the company's "operating leverage despite the strategy shift," he further stated.

Oppenheimer: "Palo Alto delivered a solid end to its FY24, beating estimates behind solid platform selling," Kidron wrote in a note. The company's NGS ARR continued to be strong and it closed 90 platform deals in the quarter, he added.

"Positively, mgmt. reiterated its 2,500-3,500 platform deal guidance to reach its FY30 $15B ARR target, with the company already having closed >1,000," the analyst stated. "While the long-term success of the strategy remains to be seen, we are encouraged by the early success," he added.

JMP Securities: "Management provided an update on total customer counts for what we view as key areas of growth for the business, including the SASE (i.e., zero trust architecture) and Cortex (i.e., security operations) product suites," Walsh said. Palo Alto Networks now has more than 5,300 SASE customers and over 6,100 Cortex customers, he added.

"Customer growth in SASE is helping to drive overall Firewall as a Platform (FWaaP) billings which were up 17% y/y and also contributing to new logo generation for the company as one third of new SASE customers in FY24 were not previously Palo Alto Networks customers," the analyst stated.

WestPark Capital: Palo Alto Networks reported earnings of $1.51 per share, beating consensus of $1.40-$1.42 per share, Rodriguez said.

"We did notice product revenue (which includes FW appliances) was down 5% in Q4 which was in-concert with feedback from our checks," the analyst stated. "However, management did indicate they expected product revenue to grow 0-5% in FY25," he added.

PANW Price Action: Shares of Palo Alto Networks had risen by 7.04% to $367.54 at the time of publication on Tuesday.

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