Stock Track | Palo Alto Networks Plummets 5% as HSBC Cuts Rating on Valuation Concerns

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Palo Alto Networks (PANW) stock plummeted 5% in the pre-market trading session on Friday, following a downgrade from HSBC analysts due to valuation concerns.

HSBC downgraded PANW shares to "Reduce" from "Hold" and lowered the price target to $291 from $304. The investment bank expressed concerns that the market is overestimating Palo Alto Networks' growth trajectory, particularly the anticipated rebound in fiscal year 2026 and beyond.

Despite Palo Alto Networks reporting solid financial results for the fiscal first quarter of 2025, with revenue and non-GAAP operating margin exceeding expectations, HSBC analysts believe the stock is being priced like a 20%+ growth company, while a mid-teen revenue growth trajectory may be more likely. They stated that the recent re-rating of the stock is linked to expectations of a strong rebound in fiscal 2026, which may not be fulfilled.

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