NEW YORK (TheStreet) -- Shares of Palo Alto Networks (PANW) are rising 1.06% to $182.56 in Thursday's pre-market trading after analysts at RBC Capital Markets raised their price target to $200 from $180 with an "outperform" rating.
The California-based company provides enterprise security platform to enterprises, service providers, and government entities.
"We had the opportunity to market with Palo Alto and if we could sum up the meetings in one word, it would be confident," analysts said.
They continue to believe security spending intentions remain robust and that upside could come from the internal renewal cycle, expanded distribution and share-shift, endpoint, and additional margin expansion, the firm noted.
Additionally, the company's management is confident, expecting Palo Alto Networks to become the biggest security company in the world, according to the analyst note.
Separately, TheStreet Ratings team rates PALO ALTO NETWORKS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate PALO ALTO NETWORKS INC (PANW) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and compelling growth in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- PANW's very impressive revenue growth greatly exceeded the industry average of 0.6%. Since the same quarter one year prior, revenues leaped by 55.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 71.42% and other important driving factors, this stock has surged by 123.31% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- PALO ALTO NETWORKS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PALO ALTO NETWORKS INC reported poor results of -$3.03 versus -$0.41 in the prior year. This year, the market expects an improvement in earnings ($0.83 versus -$3.03).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Communications Equipment industry and the overall market, PALO ALTO NETWORKS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio of 1.06 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, PANW's quick ratio is somewhat strong at 1.03, demonstrating the ability to handle short-term liquidity needs.
- You can view the full analysis from the report here: PANW Ratings Report