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Palo Alto Networks stock braces for a major breakout to $400

Writer's picture: Chris Chris

Palo Alto Networks
Palo Alto Networks


Palo Alto Networks (PANW) is the biggest cybersecurity company globally by market cap. It specializes on providing cloud security solutions to big and small companies globally.


Over the years, it has attracted big companies like ADT, Caesars Entertainment, Salesforce, and Autodesk as customers. 


The company has also appeared as the leader in Magic Quadrant for network firewalls and is much ahead of its top competitors like Fortinet, Cisco, and Check Point Software. It is also in the leader category for endpoint protection platforms (EPP). 


Palo Alto Network exists in an industry that is seeing strong growth globally as cyber threats jump. Also, the company can upsell solutions to existing customers. For example, a company buying its hardware firewall can also buy its software firewall and its code security solutions.


Palo Alto’s business has been growing, which has helped push its annual revenue from $3.4 billion in 2020 to over $8 billion in 2023. 


Its stock was trading at $368 on Tuesday while the HypeIndex figure rose to 96%. 



Palo Alto Networks HypeIndex
Palo Alto Networks HypeIndex


Positive hype


  • Palo Alto Network’s stock has jumped sharply in the past few weeks. It has jumped to $368, its highest level since February 20th and 41% above its lowest level this year.


  • This rebound has helped the stock fill the 30% down gap that it made on February 20th when it published strong results but lowered its guidance. 


  • Its recent financial results (Q4’24) showed that its growth continued as its revenue jumped to over $2.18 billion, higher than the $1.95 billion it made in Q4’23. 


  • Palo Alto’s profitability continued as its net profit jumped to a record $357 million, higher than the $227 million it made in the same quarter in 2023.


  • The company has also noted that it has had a small increase of customers from CrowdStrike, another cybersecurity company that caused a major outage globally. It is unclear whether some of these companies will opt for its services.


  • Palo Alto Networks is also benefiting from the ongoing trend of platformization, where companies are moving from many software providers to one. It hopes that this platformization trend will generate annual run rate of over $15 billion by 2030.


  • The company is also benefiting from the ongoing artificial intelligence growth, with its Cortex solution expected to cross $1 billion ARR this year. 


  • Unlike in the previous quarter when it gave a weak guidance, the company has now boosted its outlook, with total revenue expected to be between $2.1 billion and $2.13 billion. 


Negative hype


  • Palo Alto Networks operates in a highly competitive industry. Some of its biggest competitors are companies like SentinelOne, CrowdStrike, Fortinet, and Check Point Software. As the industry matures, there are chances that its growth will stall.


  • Like its peers, Palo Alto Networks is a highly overvalued company as it trades on a forward price-to-sales ratio of 112.80, higher than other companies like Microsoft and Nvidia which are having faster growth.


  • Palo Alto Networks also spots a higher valuation multiple than other cybersecurity companies like Fortinet, Zscaler, and Qualys. 


Summary of Palo Alto Networks stock



Palo Alto Stock Price
Palo Alto Stock Price


The weekly chart above shows that the Palo Alto Networks stock has been in a strong bull run for a long time. It has soared from a low of $35.50 in 2017 to over $360. This 950% growth rate has transformed it into the biggest company in a highly competitive sector. 


Earlier this year, the stock suffered a sharp reversal after publishing weak guidance in February. It bottomed at $260 and has now bounced back and is nearing its all-time high of $380.90. 


The stock has constantly remained above the 50-week moving average, meaning that bulls are in control. Therefore, the outlook is bullish, with the first stop being at $380, its all-time high. A move above that level will push stocks to the key psychological point at $400.


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HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.

The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.


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