PANW Stock Forecast & Price Target

Palo Alto Networks reported a significant increase in gross profit, rising 14.95% year-over-year to reach $1.86 billion, indicating a strong performance in its financial operations. In addition, subscription and support revenue also grew by 14.83% year-over-year, totaling $1.96 billion, reflecting the firm's robust demand for its cybersecurity solutions. Furthermore, the company demonstrated impressive operational efficiency, with operating income soaring 108.56% year-over-year to $497.2 million, underscoring its capacity to leverage revenue growth into substantial profit improvements.

Palo Alto Networks has experienced a decline in Return on Capital (ROC), dropping from 21.85% to 20.70% over the last twelve months, indicating a deterioration in its efficiency and profitability. Additionally, the company faces significant risks, including a slowdown in its traditional firewall business, potential reductions in contract duration due to rising interest rates, and intensified competition in the Secure Access Service Edge (SASE) market. Concerns have been further exacerbated by unclear communication regarding the contributions of acquisitions to revenue growth, coupled with skepticism about the company's ability to achieve projected growth in the Next-Generation Security Annual Recurring Revenue (NGS ARR) for FY26.