D.A. Davidson maintained its buy rating and $345 price target on Palo Alto Networks (NASDAQ: PANW) shares on Wednesday, citing expectations for strong fourth-quarter fiscal 2026 results.
The firm expects the cybersecurity company to surpass consensus estimates across key financial metrics, though it noted the bar remains high given recent outperformance. D.A. Davidson lowered its adjusted free cash flow margin estimate for fiscal 2026 to 37.3% from 37.9%, citing a more conservative outlook.
Palo Alto Networks is scheduled to report fourth-quarter earnings before the market open on Tuesday, September 1. Options data indicates a potential 8.6% move in the stock following the announcement, reflecting elevated expectations.
The company’s shares have surged 84.5% over the past year and 127.5% in the last six months, trading at $339.05 as of the latest close. D.A. Davidson’s $345 target implies modest upside from current levels, while other analysts project higher valuations: BofA Securities at $420, Benchmark at $400, JPMorgan at $384, and BTIG at $380.
Analysts anticipate the company will deliver revenue and annual recurring revenue guidance for fiscal 2027 that exceeds consensus. BofA Securities emphasized next-generation security ARR growth and hardware revenue, while Benchmark highlighted potential upside across multiple metrics. JPMorgan pointed to strong platform momentum and free cash flow generation, and BTIG cited positive feedback from channel partners involved in significant annual sales of Palo Alto Networks products.
InvestingPro, however, flagged the stock as overvalued at current levels, placing it on its "Most Overvalued" list. The firm did not provide a price target in its assessment.
Palo Alto Networks’ upcoming earnings report will be closely watched for evidence of AI-driven growth, particularly in its Mythos platform, which analysts say must be clearly reflected in results and guidance to justify recent gains.
