Palo Alto Networks (PANW) fell 5.4% on May 23 to close trading at $215.79. The tech sell-off on Thursday most likely drove Palo Alto stock lower. The S&P 500 ETF (SPY) fell 1.2% yesterday, while the PowerShares QQQ ETF (QQQ) fell by 1.5%. Palo Alto stock has declined 13.3% this month. It is still up by 14.6% since the start of 2019. In comparison, SPY has fallen 4% this month and gained 13.4% in 2019, while QQQ has fallen 6% this month and gained 15.8% in 2019.
Palo Alto Networks stock is trading 35% above its 52-week low and 17% below its 52-week high. Has the recent pullback made the stock attractive?
PANW stock is trading at a forward PE multiple of 33.6x. In comparison, its EPS are expected to rise by 37.3% in 2019 and by 17.3% in 2020. Its earnings are expected to rise at a compound annual growth rate of 26.8% in the next five years. The stock does not look overvalued considering the PE multiple.
PANW stock has increased at an annual rate of 24.6% in the last five years. In comparison, its sales rose at a compound annual growth rate of 42.0%, while earnings rose by an impressive 71.4.0%. So will investors pay 34x for earnings growth of 26.8% in the next five years and sales growth of 21% in the next three years?
Out of the 41 analysts covering PANW, 29 recommend a “buy,” ten recommend a “hold,” and two recommend a “sell.” The average 12-month target price for PANW stands at $279.91, indicating upside potential of 30% from its current price.