By Senad Karaahmetovic
Analysts from Wolfe Research initiated research coverage on Palo Alto Networks (NASDAQ:PANW) with an Outperform rating and a $700 per share price target.
The PANW stock is a “consensus long as investors look to hide out in security names that can deliver both growth and free cash flow margins at an attractive valuation,” analysts wrote in an initiation note.
“With our checks citing continued strong demand for firewall (even ex-supply chain benefits), we believe that at a 21x EV/CY23 base case FCF multiple investors can continue to seek refuge in this name,” analysts added.
Despite firewall positives, Wolfe analysts see PANW as “much more than just firewall”. They believe this side of the PANW story is underappreciated by the market.
“What if we told you that our sum of the parts implies that the traditional firewall business accounts for 93% of the current valuation (would be 100% at FTNT's valuation), suggesting that investors are assigning very little value to the Next Generation Security portfolio?”
Ultimately, PANW is well-positioned to grow into “total platform domination”.