A Look At Palo Alto Networks (PANW) Valuation After Earnings Beat But Softer Guidance Spurs Volatility

Simply Wall St.02-25 13:31

Palo Alto Networks (PANW) is in focus after its latest quarterly earnings beat on revenue but fell short on guidance, a combination that hit the share price hard and pushed volatility sharply higher. ...

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See our latest analysis for Palo Alto Networks. Those earnings and guidance comments landed in a stock that was already under pressure, with a 7 day share price return of a 13.35% decline and a 30 day share price return of a 21.37% decline, feeding into a year to date share price return of a 21.02% decline. This comes even though the 3 year total shareholder return is 50.42% and the 5 year total shareholder return is 139.67%, so recent momentum is clearly fading compared with longer term gains. If cybersecurity volatility has your attention, it could be a good moment to look across the sector and see what else is moving through our screener of 59 profitable AI stocks that aren't just burning cash. With Palo Alto Networks now trading at a sharp discount to average analyst targets and screens flagging an intrinsic discount as well, the key question is simple: is this a reset that opens a buying window, or is the market already factoring in the company’s future growth? AdvertisementMost Popular Narrative: 41% Undervalued At a last close of $141.67 against a narrative fair value of $240.06, Palo Alto Networks is framed as materially discounted according to a widely followed thesis.  Palo Alto Networks represents the clearest beneficiary of cybersecurity's inevitable platform consolidation. As the world's largest cybersecurity company ($130B market cap, $9B+ revenue), PANW has successfully transformed from a firewall vendor into a comprehensive security ecosystem that customers increasingly view as essential infrastructure.  Read the complete narrative. Want to see how this platform story supports that higher value? According to martyw, the fair value rests on ambitious revenue expansion, rising margins, and a premium profit multiple. The full narrative lays out the cash flow path that aims to justify that price tag. Result: Fair Value of $240.06 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, this depends on CyberArk being integrated smoothly, and on competitors such as Microsoft not squeezing pricing power or slowing platform adoption. Find out about the key risks to this Palo Alto Networks narrative. Another View: High P/E Puts Some Friction On The Discount Story While our DCF work and the 41% narrative discount point to value, the current P/E of 90.2x sits far above both the US Software industry at 24.2x and peers at 33.6x, and more than double the fair ratio of 39.9x. That gap signals valuation risk, so is the market still paying too much for growth? See what the numbers say about this price — find out in our valuation breakdown. NasdaqGS:PANW P/E Ratio as at Feb 2026Next Steps With mixed signals on valuation, risks and rewards, it makes sense to check the underlying data yourself and not rely on any single story. To weigh the upside against the concerns in a clear way, take a closer look at the 4 key rewards and 2 important warning signs. Ready for more investment ideas? If Palo Alto Networks has sharpened your focus, do not stop here. Use the Simply Wall St Screener to line up your next set of research candidates.  Spot potential value opportunities early by reviewing our 51 high quality undervalued stocks that stand out on price and quality checks. Back your research with balance sheet strength by scanning the solid balance sheet and fundamentals stocks screener (40 results) that can better withstand tough conditions. Get ahead of the crowd by studying a screener containing 23 high quality undiscovered gems that most investors are not paying attention to yet.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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