Overview
BTIG has revised its valuation on Palo Alto Networks (NASDAQ:PANW), reducing its price target to $200.00 from $248.00 while retaining a Buy recommendation on the cybersecurity vendor's stock. The lowered target still implies approximately a 21% upside from PANW's prevailing share price of $165.30. Year-to-date the stock has declined by over 10%, and it remains about 26% below its 52-week peak of $223.61.
Valuation and rationale
Despite reporting more favorable sentiment from channel checks, BTIG pointed to "multiple compression across software" as the principal factor behind the cut to its price target. That view is consistent with current valuation metrics: InvestingPro data referenced in the report shows Palo Alto Networks trading at a price-to-earnings ratio of 104.79, signaling a premium valuation notwithstanding recent weakness in the share price.
Channel checks and partner feedback
BTIG's note reflects conversations with eleven industry contacts about cybersecurity trends, and it placed particular emphasis on feedback from five large channel partners that together account for $1.3 billion in annual Palo Alto Networks sales. Those partner discussions indicated a pickup in activity during December and January. The research firm highlighted especially positive commentary around several product areas - Prisma SASE, software firewalls, XSIAM and Prisma AIRS - which partners flagged as drivers of demand.
Outlook and targets
Following the channel feedback, BTIG said it has greater confidence that Palo Alto Networks can outperform Street estimates in its fiscal second quarter of 2026 and reach the high end of its Next-Generation Annual Recurring Revenue (ARR) objectives for fiscal 2026, on the condition that those results exclude any contributions from merger and acquisition activity.
Corporate development
In a material corporate move, Palo Alto Networks has completed its acquisition of CyberArk Software. Under the terms of the merger agreement, each CyberArk share was converted into 2.2005 shares of Palo Alto Networks common stock plus $45.00 in cash, and CyberArk is now a wholly owned subsidiary. The acquisition expands Palo Alto Networks' product footing as it integrates CyberArk's offerings.
Broker reactions ahead of earnings
With Palo Alto Networks scheduled to report results on February 17, several brokerages adjusted their targets. DA Davidson trimmed its price target to $210 while maintaining a Buy rating. Stifel also cut its target to $200 and kept a Buy rating, citing research with key cybersecurity resellers and systems integrators. Jefferies maintained its Buy stance with a $250 target, noting CyberArk's 20% year-over-year growth in net new ARR as a positive data point.
Key takeaways
- BTIG reduced its Palo Alto Networks price target to $200 from $248 but maintained a Buy rating, citing multiple compression across software.
- Channel partner checks showed improving activity in December and January, with strong feedback on Prisma SASE, software firewalls, XSIAM and Prisma AIRS.
- Palo Alto Networks completed its acquisition of CyberArk under a share-and-cash conversion, and several brokers adjusted targets ahead of the company's February 17 earnings release.
Risks and uncertainties
- Valuation compression in the software sector - continued multiple compression could weigh on Palo Alto Networks' market valuation despite operational improvements.
- Execution risk around hitting Next-Generation ARR targets - achieving the high end of FY2026 ARR goals is conditioned on excluding any M&A contributions.
- Integration risk from the CyberArk acquisition - while the deal is closed, the extent to which CyberArk contributes to revenue and ARR targets remains subject to integration outcomes.
The information above is based on the analyst notes, partner conversations and corporate disclosures reported in the research communications referenced.