Palo Alto Networks: A Curious Case

by

Cybersecurity Lock

Now, Palo Alto Networks. A rather peculiar beast, wouldn’t you say? For the past year, its stock has been performing a rather clumsy tumble, losing a quarter of its value. And just last week, after announcing its latest earnings, it took another little dip. A wobble, if you will. One might almost feel sorry for it, if it weren’t a vast, complicated company fueled by bits and bytes and the anxieties of chief technology officers.

Let’s poke around a bit, shall we? See if this little stumble presents an opportunity. A chance to scoop up some shares before the grown-ups notice.

An Appetite for Acquisitions

Palo Alto, you see, has decided it wants to be a one-stop shop for all things cybersecurity. A grand ambition! Rather like a greedy goblin trying to hoard all the gold in the kingdom. Instead of selling bits and pieces, they’re swallowing up other companies – whole! They’ve been on a spree, gobbling up firms that monitor data (Chronosphere, a perfectly sensible name), control access (CyberArk, sounding like a particularly grumpy pirate), and now, Koi, which deals in… well, let’s call it ‘smart’ security. Artificial intelligence, they say. Sounds suspiciously like magic to me.

Now, all this buying is expensive. Like a child raiding the sweet shop with his father’s credit card. It makes the numbers look a bit wobbly in the short term, especially because of that CyberArk deal. A hefty chunk of shares had to change hands, you see. A rather messy transaction, if you ask me.

But the company insists it’s all part of the plan. Revenue jumped a respectable 15% to $2.59 billion, landing right where they expected it. Their ‘service’ revenue – the stuff they sell over and over again – climbed 13%. And their ‘product’ revenue – the shiny new toys – jumped 22%, mostly thanks to those clever software firewalls.

Their ‘next-generation security’ – a rather grand title, don’t you think? – is booming. Annual recurring revenue surged 33%, or 28% if you ignore all the companies they’ve swallowed. And their ‘SASE’ – Secure Access Service Edge – is doing particularly well, soaring 40% to over $1.5 billion. A mouthful, isn’t it? Sounds like a particularly nasty spell.

And the earnings? Well, they jumped 27% to $1.03 per share, beating expectations. Not bad, not bad at all. Though, of course, the real trick is keeping all these plates spinning.

Looking ahead, they’ve adjusted their forecasts. Revenue is up, but earnings are down, thanks to all the acquisitions. Here’s a table, if you’re the sort who likes numbers:

Metric Fiscal 2026 Q3 Forecast Prior Fiscal 2026 FY Forecast (from Aug) Prior Fiscal 2026 FY Forecast (from Nov) Current Fiscal 2026 FY Forecast
Revenue $2.941 billion to $2.945 billion $10.475 billion to $10.525 billion $10.5 billion to $10.54 billion $11.28 billion to $11.31 billion
Revenue growth 28% to 29% 14% 14% 22% to 23%
NGS ARR $7.94 billion to $7.96 billion $7 billion
to $7.1 billion		 $7 billion
to $7.1 billion		 $8.52 billion
to $8.62 billion
NGS ARR growth 56% 26% to 27% 26% to 27% 53% to 54%
Adjusted EPS $0.78 to $0.80 $3.75 to $3.85 $3.80 to $3.90 $3.65 to $3.70
EPS growth -3% to 0% 12% to 15% 14% to 17% 9% to 11%

A Bargain, Perhaps?

Now, the stock price has fallen, making Palo Alto Networks rather more affordable than it used to be. A forward price-to-sales ratio of 9 times fiscal 2027 estimates, and a forward price-to-earnings ratio of 33 times. Still a bit pricey, mind you, but not outrageous.

These acquisitions will cause some short-term hiccups, naturally. But if they play their cards right, they could build something truly remarkable. A fortress against all the digital nasties lurking in the shadows.

So, should you buy the stock? Well, if you’re feeling adventurous, and you don’t mind a bit of a wobble, it might be worth a look. A small investment, perhaps, while the grown-ups are distracted. Just don’t tell them I sent you.

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2026-02-23 00:56