Scotiabank Reaffirms $225 Target for Palo Alto Networks After Solid Q3 Results
Analyst Patrick Colville praised the company's performance, noting that the in-line F3Q Remaining Performance Obligations print was excellent, particularly given the external economic pressures.
Colville emphasized that Scotiabank's positive outlook for the firewall market in 2025 is consistent with Palo Alto Networks' product revenue growth. Since a number of investors base Palo Alto Networks' valuation on FCF multiples, management's affirmation of its fiscal year 2026 and 2027 targets was also taken as a positive sign.
Scotiabank regards Palo Alto Networks Inc. (NASDAQ:PANW) as one of the most attractive long-term investments in the software industry. The firm credits Palo Alto's core operations' resilience, the benefits of vendor consolidation, and the growing traction in the use of Secure Access Service Edge (SASE) solutions and cloud-based security offerings as key factors contributing to this strength.
Colville did, however, caution that the F4Q RPO guidance suggests a potential obstacle, as a significant change in net new RPO growth year-over-year is anticipated.
While we acknowledge the potential of PANW to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than PANW and that has 100x upside potential, check out our report about the cheapest AI stock.
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