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Public Markets Investor, Opportunistic Buying & Cost-Basis Management
Palo Alto Networks looks stretched, with valuation ratios and growth rates resembling its 2021 levels, and the forward multiple is still 22x. @investing_bear makes the same case for CrowdStrike, whose trailing price-to-sales is 43.5 on 26% revenue growth, versus 38.4 at end-2021 on 63% growth. 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' 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 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 looks overextended at 100x EPS for a company growing at most 20%, after running from 308 to 389. x.comÂ
Cybersecurity is a clear secondary beneficiary of AI that has been lumped into the software selloff, and Palo Alto Networks is one of the safe bets. It trades at 9x NTM sales for about 23% growth, with a Rule of 40 score above 60 and its CEO buying shares, which is hard to ignore. CrowdStrike and Zscaler are the other safe bets. x.comÂ
Palo Alto Networks is the most overvalued cybersecurity stock by a mile, at about 25x forward revenue while growing only 15% organically. Anything above 10x revenue is hard to justify, let alone 20x. Worse, the "Mythos moment" that sent cyber valuations vertical has not yet shown up in its results. x.com x.comÂ
CrowdStrike and Palo Alto Networks need 50%-plus growth to deliver even a 10% IRR over a realistic horizon, but almost no conceivable case gets them there. They feel as dumb as Zoom and Peloton in 2021. Even if revenue doubles over four to five years, Palo Alto would still trade at 10x revenue and CrowdStrike at 20x, leaving little prospect of a real IRR; Palo Alto is growing in the teens today. x.com x.com x.comÂ
Palo Alto Networks has strong secular tailwinds as AI adoption drives platform market-share gains, so the winner should be left to run. Morgan Stanley named it a sector top pick, raised its target to $410 from $394 with an Overweight rating, and cited underestimated enterprise spending consolidation. The stock trades near 52-week highs. 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
