Palo Alto Networks (PANW.US) performed well but the stock price fell, and Wall Street bluntly said “it's a good opportunity to buy on the dips”

The Zhitong Finance App learned that although cybersecurity company Palo Alto Networks (PANW.US)'s performance and guidance were better than expected, the company's stock price fell 2.5% in pre-market trading on Wednesday. Despite this, the company's performance was praised by Wall Street.

Palo Alto Networks announced financial results for the fourth quarter and full year of the 2026 fiscal year. Fourth-quarter revenue reached US$3.41 billion, up 34.3% year over year, exceeding market expectations of US$3.35 billion by about US$60 million; adjusted earnings per share were US$1.02, which also exceeded expectations of US$0.98. Revenue for the full fiscal year 2026 reached US$11.5 billion, a year-on-year increase of 24%.

Jefferies analyst Joseph Gallo maintained a “buy” rating for Palo Alto Networks with a target price of $450. Gallo called Palo Alto's performance “outstanding” and said he believes there is more room for growth in the company's “impressive” performance guidance for fiscal year 2027, driven by artificial intelligence.

“This is PANW's brightest recent earnings report. The Mythos business grew in the fourth quarter, although management also indicated that it is still in its early stages,” Gallo wrote in a report to clients. “The revenue guidance for fiscal year 2027 is US$14.15 billion (up 23% year over year), higher than expected (21%). More importantly, considering the slowdown in core cybersecurity/artificial intelligence business and the recent strong increase in order volume, the stock still has a lot of room to rise.”

Bank of America analyst Tal Liani reiterated his “buy” rating for Palo Alto and his target price of $420, and said any weakness in the stock is a buying opportunity.

“Although NGS's annual recurring revenue exceeds market expectations by about 3%, we believe that investors may expect stronger results to drive up stock prices,” Liani wrote in a report to clients. “Under these circumstances, we believe that the lackluster market reaction after the market reflects more of the serious challenges of the market environment than the deterioration in quarterly performance.”

BNP Paribas analyst Andrew DeGasperi pointed out that the company's adjusted free cash flow rate for the 2027 fiscal year was only 37.5% to 38%, lower than buyers' expectations, which may be the main cause of post-market share price fluctuations. However, DeGasperi pointed out that this was “one of the brightest quarters in recent years” for Palo Alto Networks, but also warned that the company expects 61% of NGS ARR to be confirmed in the second half of the year. This “back-end concentration” may cause short-term expectations to fluctuate in the first half of the year.

J.P. Morgan analyst Brian Essex has a price target of $384 for Palo Alto Networks. Essex said the company, led by Nikish Arora, is achieving “steady execution” and is benefiting from the favorable factors brought by artificial intelligence to accelerate development. Alola said in an interview that the nearly $1 trillion cybersecurity infrastructure is unprepared for artificial intelligence.

“Following the Mythos incident, there was a growing need for CIOs to improve their security posture. We still believe that with its platform advantage, the company is well positioned at the right time to help CIOs adapt to a fundamental shift driven by artificial intelligence in cybersecurity,” Essex wrote in a report to customers. “In addition to being able to provide a platform to speed up average customer response times, the company also stated that customers wanted to resolve technical debt issues by integrating traditional IT solutions into their platforms. We are encouraged by the accelerated growth and positive momentum of the quarter, and maintain the company's' incremental 'rating while adjusting our expectations to reflect current results and outlook.”