Palo Alto Networks Shares Rise on Analyst Upgrade
Security provider Palo Alto Networks (PANW) - Get Report closed up 2.31% Thursday to $210.97 after Wedbush upgraded the stock to outperform, citing a strong upgrade cycle for its key firewall product.
"We strongly believe for PANW that numbers for FY19/FY20 look conservative and the Street is still underestimating the magnitude of this existing firewall refresh for the company as a major tailwind over the next few years," wrote Wedbush's Daniel Ives and Strecker Backe in a research note.
Wedbush upgraded Palo Alto to Outperform from Neutral and raised its price target from $225 to $265, representing about 26% upside from the stock's current $210.
Ives and Backe wrote that conversations with customers and partners, as well as field checks, have given them "incremental confidence" in the company's growth story over the next 12 to 18 months. They noted that those conversations and checks allayed their previous concerns about the company's sales force disruption, a new CEO who appeared ready to do significant M&A, lack of preparation for the impending shift to the cloud and an unpredictable firewall refresh cycle.
Palo Alto also received upgrades from UBS and BMO Capital on Tuesday.
Jim Cramer's Action Alerts Plus Portfolio, which owns Palo Alto, is similarly positive on the company's firewall prospects.
"While we have looked to the firewall business for earnings support in the near- to- mid-term, we have also called out that we value Palo Alto for CEO Nikesh Arora's intense focus on winning the cloud security space," write Cramer and his team.
