Entering text into the input field will update the search result below

Palo Alto: Studying The Resurgence

Jun. 08, 2020 10:06 PM ETPalo Alto Networks, Inc. (PANW)CRWD, CSCO, GOOG, FTNT, VMW, ZS7 Comments
Kayode Omotosho profile picture
Kayode Omotosho


  • Palo Alto is trying to redefine the capabilities of a best of breed cybersecurity platform.
  • The groundwork has been laid. As it completes its strategy switch, some of the unlocked gains from the last decade will be carried into the current period.
  • This carryover will compound returns for investors.
  • The potential disruption in the public cloud will catalyze the harvest process.
  • Investors should maintain a bullish outlook.

Source: SiliconAngle

Palo Alto Networks (NASDAQ:PANW) has invested in capturing the potential gains from the expanding cloud security space. As it completes its product integrations, it will accelerate its go-to-market engine. This will be aided by favorable demand-side tailwinds, the potential to cross-sell into its huge install base, and the unmasking of the potentials in its next-generation security bets. Palo Alto has the brand power, sales capacity, and financial stamina to execute to fruition. As the dots connect backward, investors with the patience to establish a long-term outlook will be handsomely rewarded.

Demands (Rating: Bullish)


Palo Alto exceeded expectations last quarter. However, a mixture of macro uncertainty and product evolution worries put a cap on the expected multiple expansion. Palo Alto reported a 19.7% (beats by $37.88M) revenue growth. The beat was a mix of better-than-expected product revenue growth, and a solid subscription and support growth (+31% y/y). Billings grew by 24% despite the liquidity worries in the first quarter of the year. It is also reassuring to know that firewall and platform billings recorded a 13% growth. That’s way above the market growth of 6% to 8%. This is important because it highlights two attractive ideas: appliance revenue isn’t going away anytime soon, and Palo Alto’s platform investment is beginning to pay off. The logic for investing in the future of cybersecurity stems from the growing cloud security market (21.2% CAGR from 2018-2022), which now expands Palo Alto's total addressable market to $72.6B in CY'22. This is easy to digest when juxtaposed against the $850B+ potential disruption that will happen in the public cloud space.

Going forward, management is expecting Q4’20 billings growth of 13%-14%, and Q4’20 revenue growth of 14%-15%. For the full year, Palo Alto raised guidance. Billings will grow at 18%, and revenue growth is set at 16%-17%. This raise is partly

This article was written by

Kayode Omotosho profile picture
Kayode's strategy aligns only with businesses that have competitive moats, solid financials, good management, and minimal exposure to macro headwinds.-------------------------------------Coverage tilted towards tech stocks (IoT, Cybersecurity, Cloud, DevOps, Data management)

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (7)

Ta0 profile picture
I have been constantly adding this guy, at every pull back, since $60/share. It's one of my biggest growth holdings. Ever since it passed $100, everyone keeps telling me it's too expensive. I never listened. I just kept buying this rising knife (is that the correct term for it?).
zito profile picture
I like the industry, but it seems very pricey in this market. In addition the chart for PANW shows it failed at $250 then at $240; I would look to enter closer to $200.
Uhle profile picture
Thanks for the article.
Stock based compensation is getting pretty big at Palo Alto. Management earns freaking much, shareholders havent seen much in quite a while.
I hope you are right and they start performing better soon!
Thanks for the article. My personal favorites are CSCO (defensive) and FTNT, although I did not found a good entry point in FTNT
lew69sd profile picture
Crowdstrike is taking market share from Palo Alto Networks. I would rather own CRWD.
Can you advise DIV rate of CRWD?
Ron Burgundy’s Hair profile picture
PANW has benefited from crooked hillary’s illegal non-Govt non-secure basement bathroom server where she exchanged TS/SCI classified data and the system was hacked by multiple foreign governments. Now all federal Govt employees as part of their annual IT user certification are instructed not to do what she did (ie, using a non-Govt server to exchange govt records) let alone the obvious illegality of mishandling classified information (felony).
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.