UBS has reaffirmed its neutral rating on Palo Alto Networks (NASDAQ: PANW) with a $390 price target, as the cybersecurity firm’s stock remains below that level. The stock last traded at $362.09, compared with UBS’s target, after closing at $371.59 on August 28, down 2.94%. Pre-market activity showed shares at $368.68.
Analysts at Rosenblatt, Morgan Stanley, TD Cowen, Baird and Evercore ISI have also updated their views, with most maintaining positive ratings and price targets ranging from $394 to $420. TD Cowen raised its target to $415 while keeping a buy rating, while Baird maintained an outperform rating with a $420 target. The divergence reflects differing views on valuation and growth trajectory.
Palo Alto Networks reported fourth-quarter revenue of $3.41 billion, a 34% increase year-over-year, and non-GAAP earnings per share of $1.02, exceeding the top of its guidance range by four cents. For fiscal 2027, UBS projects revenue growth of 23-24%, above street expectations, with stable margins slightly below consensus. The firm also expects 16% revenue growth in the second half of 2027.
Next-Generation Security Annual Recurring Revenue (NGS ARR) reached approximately $1 billion in fiscal 2026, including roughly $680 million in organic growth. For fiscal 2027, UBS forecasts NGS ARR growth of 22-23% to $2.025 billion, slightly below consensus, while TD Cowen highlighted a 63% year-over-year rise in NGS ARR to $9.1 billion. UBS values the stock at 45 times EV/FCF on fiscal 2028 estimates, assuming mid-teens growth.
Segment projections include 30% growth for Cortex, high-teens to 20% for Idira, and a deceleration in Network and AI Security from 17% in fiscal 2026 to low double digits in fiscal 2027. Shares have gained 40% since early June and delivered a 141% return over the past six months.
