BMO Capital Markets reduced its price objective for Palo Alto Networks (NASDAQ:PANW) to $200 from $230 while preserving an Outperform recommendation. The cybersecurity company is trading at $163.50, below the current analyst target range of $157 to $265 and a consensus recommendation score of 1.71 (Buy).
The firm said it made no material revisions to its fiscal 2026 estimates for annual recurring revenue, remaining performance obligations, revenue, or free cash flow, excluding the effects of mergers and acquisitions. BMO projects 13% to 15% year-over-year organic net new next-generation security annual recurring revenue growth over the next two quarters, a projection the firm noted is consistent with Palo Alto Networks’ recent trajectory.
BMO also flagged uncertainty in the broader software segment, noting that investors are more likely to reward upward revisions to estimates than to leave them unchanged. Despite trimming the price target, the firm reiterated its view that Palo Alto Networks can sustain longer-term low double-digit organic year-over-year growth, supported by what BMO described as a broad product portfolio. The Outperform rating was retained following the adjustment to the target price.
Company results and strategic moves
Palo Alto Networks reported second-quarter fiscal 2026 results that modestly exceeded expectations, with revenue beating projections by $14 million. Management attributed the upside in part to strong demand for hardware firewall products. The company left its organic growth outlook intact and reflected that outlook in updated fiscal 2026 guidance.
On the merger and acquisition front, Palo Alto has completed purchases of Chronosphere and Cyberark and announced plans to acquire Koi, described as a leader in Agentic Endpoint Security. The company says the Koi transaction is intended to bolster its ability to address AI-driven enterprise security challenges.
Where other analysts stand
- Piper Sandler maintained an Overweight rating with a $265 price target, citing durable growth.
- Scotiabank lowered its price target to $180, pointing to concerns over complexity, while keeping a Sector Outperform rating.
- Bernstein SocGen Group adjusted its target to $209 and emphasized Palo Alto Networks’ 15% organic growth metric.
- Morgan Stanley revised its price target to $223 and kept an Overweight rating, noting alignment with key security trends.
Outlook and context
BMO’s trimmed target reduces upside relative to some peers but does not reflect a revision to the firm’s underlying fiscal 2026 projections outside of potential M&A impacts. The company’s recent revenue beat and acquisitions were cited as contributors to near-term performance and strategic positioning.
Investors and market participants will likely continue to watch revisions to analyst estimates, hardware firewall demand, the trajectory of organic next-generation security ARR, and the integration outcomes from Chronosphere, Cyberark, and the announced Koi deal for signals on the stock’s forward path.