Of the 41 analysts tracking Palo Alto Networks (PANW), 29 have recommended “buys,” ten have recommended “holds,” and two have recommended “sells” on the stock. Analysts have a 12-month average target price of $265.88 on the stock, which indicates a potential upside of 28.7% from its current price. Analysts had a 12-month target price of $280.0 on PANW in May.
Shares of peers FireEye (FEYE), Fortinet (FTNT), CyberArk (CYBR), and Check Point Software Technologies (CHKP) are trading at discounts of 32.0%, 19.0%, 8.0%, and 6.3%, respectively, to analysts’ average estimates.
Is PANW stock undervalued?
PANW is trading at a forward PE multiple of 33.1x. This multiple doesn’t seem too expensive considering the company’s earnings growth rate going forward. PANW’s earnings are expected to expand 35.3% in 2019, 15.6% in 2021, and 24.7% in the next five years. If PANW can beat earnings estimates, its stock price will most likely rise.
PANW has fallen since May due to the company’s transition toward a subscription-based model. This transition will affect its billings and cash flows in the near term only. The company is continuing to grow its customer base and profit margins at an impressive pace. Its revenue is still expected to rise over 20.0% annually in the next three fiscal years.
PANW expects its total addressable market to grow from $19.1 billion in 2017 to $24.0 billion in 2020.
Back in April, we stated that PANW could be due for a correction after a stellar run. However, the stock could now see a rise in the wake of its recent decline.