M Mohan
Private Equity at IncVangal, Former Microsoft Ventures Director
Palo Alto Networks is priced to perfection after running up into earnings and should head lower to $325 unless it delivers a huge beat and raise. A move back to $400 is the other side of the trade, at about 30% probability. The reported quarter beat modestly, with adjusted EPS of $1.02 versus $0.98 expected and revenue up 34% to $3.41 billion versus $3.35 billion, while GAAP results swung to a $282 million net loss. x.com x.com x.comÂ
Palo Alto Networks is an expensive stock for the profit growth it will deliver over the next couple of years, despite another strong quarter and a promising annual guide. x.com x.comÂ
Palo Alto Networks' valuation makes little sense: FY2027 guidance of $4.19 EPS at the high end implies only 9.7% growth, yet the stock trades at 85x FY2027 EPS, an 8.7x PEG ratio. By contrast, Credo guides revenue up at least 85%, implying 85% EPS growth at 28x, a 0.33x PEG, though connectivity and cybersecurity aren't directly comparable. x.comÂ
Palo Alto Networks looks set for a near-term move to $400-$410 after its CEO bought $10M of shares. The setup resembles Dell's, and cybersecurity looks attractive here. x.comÂ
Palo Alto Networks is too expensive at 21x sales and 79x forward earnings for a company expected to grow only about 20% over the next few years. Cybersecurity matters more as AI advances, but even a good company has to be bought at the right price, which is why the stock fell even after a big earnings beat. x.comÂ
Palo Alto Networks is wildly overvalued, with a market cap above $250B on $3B of revenue and $8.1B of ARR while still reporting losses. That is like paying $300k for a lemonade stand with zero costs and $10k of yearly sales, before even counting stock-based compensation. x.comÂ
Palo Alto Networks hit its $320 target on Q3 results as AI platform security and platformization hit full stride. Revenue of $3.0B, EPS of $0.85, RPO of $18.4B and next-gen security ARR of $8.1B beat estimates, and 2026 guidance rose to $11.4B of revenue and $3.78 of EPS, above estimates. CyberArk and Chronosphere contributed $388M of revenue, while AI security demand keeps supporting the platform strategy. x.com x.comÂ
Palo Alto Networks at 21x forward sales is too expensive for 17% pro-forma growth, despite BTIG's view that it is worth more than the current price. x.comÂ
Palo Alto Networks looks overextended at 100x EPS for a company growing at most 20%, after running from 308 to 389. x.comÂ
The selloff in Palo Alto Networks and cybersecurity is way overdone, as the CEO's personal $10M share purchase and the company's new $1B buyback both signal. x.comÂ
Combining estimated NTM revenue growth with trailing GAAP EBITDA margin makes Palo Alto Networks, Datadog, JFrog, Rubrik and Snowflake look overvalued against forward EV/sales. Zoom, Alphabet, Oracle, AppLovin, Microsoft, Fair Isaac, Adobe, Amazon and Teradata remain undervalued on this Rule of 40 comparison; Palantir, Cloudflare and CrowdStrike remain overvalued. x.comÂ
