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Palo Alto Networks positioned for expanding profitability - TD Cowen

Published Jun 09, 2023 12:22
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TD Cowen lifted Palo Alto Networks' (NASDAQ:PANW) price target to $260 from $235 on Friday, with analysts maintaining an Outperform rating on the stock.

The analysts told investors that the company is positioned for durable growth and expanding profitability.

"PANW's guidance indicates that the company should exit FY23 as a rule of 50 company," wrote the analysts. "The company's guidance calls for FY23 revenue growth of 25% to 26%, non-GAAP operating margins of 23% to 23.5% and adjusted free cash flow margins of 37.5% to 38.5%. For FY24, we estimate revenue growth of 23.5% y/y and operating margins expanding to 24.6%."

The analysts also commented that demand drivers remain strong as the macro environment "has not slowed malicious cyber activity, and risks related to the compromise of critical systems remain key considerations for enterprises."

As a result, they said PANW's platform strategy positions it to gain market share in this environment, while they also noted that its approach is resonating with enterprises. Furthermore, they said the company's focus on profitability is driving margins and cash flow, with its innovation positioning it for the long term.

"PANW is innovating its way into a larger share of the Enterprise wallet; for example, the company is embedding generative AI pervasively across its business," they added. "AI and ML are playing an increasingly important role in delivering tangible customer outcomes such as Zero Day Detection. Cortex is generating strong momentum and XSIAM is set to leverage automation and AI to significantly transform the SOC."

Palo Alto Networks positioned for expanding profitability - TD Cowen
 

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