Shares of Palo Alto Networks (PANW) - Get Palo Alto Networks, Inc. Report were on the rise Tuesday after analysts at Credit Suisse assumed coverage of the company with an outperform rating and a $625 price target.
The firm sees the company as a "best-in-class" technology platform that has a large and growing on-premises installed base, an expanding cloud-service portfolio and strong leadership from management.
"Palo Alto Networks spends more on R&D and sales and marketing in both absolute dollar terms and as a percentage of revenue than both Fortinet and Check Point Software Technologies. Stretching its lead against its competitors, we forecast Palo Alto Networks will continue to deliver strong revenue growth above consensus estimates," Credit Suisse analyst Phil Winslow said.
Palo Alto Networks shares were rising 1.5% to $525.84 Tuesday morning.
Palo Alto Networks will get a boost after rolling out its cloud-native security portfolio as it builds on its market share lead in the next-generation firewall market.
The company is scheduled to report its fourth quarter earnings on Thursday. Analysts polled by FactSet are expecting the company to report a first-quarter profit of $1.57 per share, down slightly from a year ago, on revenue of $1.2 billion.
To be sure, Credit Suisse does see potential headwinds for the company ahead as well.
"Competition within the industry for enterprise security is intense and may continue to increase in the future," Winslow said.
"Palo Alto Networks may not only face competition from large companies that incorporate security features in their product suites, such as Cisco Systems (CSCO) - Get Cisco Systems, Inc. Report, but also could face competition from independent security vendors."