Palo Alto Networks (NASDAQ: PANW) saw its price target lowered by Stifel to $185 from $200 on Wednesday, even as the firm maintained a Buy recommendation. The stock was trading at $153.34, trading close to its 52-week low of $144.15 and down about 31% from its 52-week high of $223.61. Analyst consensus remains generally positive, with an average recommendation score of 1.71 and mean price targets that imply roughly 35% upside, according to InvestingPro data.
Stifel highlighted that the company's second-quarter fiscal 2026 results were complicated by timing effects stemming from the earlier-than-expected closings of its acquisitions of Chronosphere and CyberArk. Those accelerated closings introduced several moving parts into the quarter’s results, which influenced organic growth metrics.
On the operational side, organic remaining performance obligations (RPO) landed at the high end of the expected range, aligning with Stifel’s expectations. Organic next-generation security annual recurring revenue (NGS ARR) was modestly below the high end of guidance, however, where the market had anticipated a slight beat.
Despite trading at a stretched earnings multiple - the stock carries a trailing price-to-earnings ratio of 96.15 - Palo Alto Networks remains profitable on a trailing-twelve-month basis, reporting $1.58 in diluted earnings per share over that period.
The company provided additional detail on organic growth dynamics across RPO, NGS ARR and revenue, and it guided third-quarter organic metrics to be in line with or modestly above consensus. Management reaffirmed full-year organic RPO and NGS ARR targets, while revenue was projected to walk modestly higher. Palo Alto Networks also reconfirmed a full-year adjusted free cash flow margin of 37%.
Management pointed to continued strength in newer product areas and use cases, naming platformizations, secure access service edge (SASE), software firewalls, XSIAM and AI security as pockets of momentum. Stifel singled out the strategic rationale behind the CyberArk acquisition, emphasizing cross-selling potential given the persistent importance of identity security. The Chronosphere deal also received a favorable nod; Stifel noted Chronosphere’s recent nine-figure expansion agreement with a major AI model provider as a sign of commercial traction.
InvestingPro’s analysis, cited by Stifel, assigns Palo Alto Networks a "GOOD" overall financial health score of 2.81 and points to strong operating cash flows totaling $3.69 billion, which, the report says, are adequate to cover the company’s moderate debt load. Additional company-specific analysis and investor guidance were noted to be available in the comprehensive Pro Research Report.
Other research shops adjusted their targets and views in response to the quarter. DA Davidson cut its price target to $190 from $210, citing limited organic growth in NGS ARR and RPO that disappointed investors. Needham trimmed its target to $200 from $230, pointing to the costs tied to the Chronosphere and CyberArk transactions. By contrast, Cantor Fitzgerald kept an Overweight rating with a $220 target, highlighting progress on artificial intelligence initiatives and potential benefits from recent mergers and acquisitions.
TD Cowen reiterated a Buy rating with a $255 price target, calling out a 33% increase in NGS ARR and a 23% rise in RPO. Truist Securities likewise maintained a Buy stance with a $200 target after the company posted results that exceeded guidance in several key areas.
For the quarter overall, Palo Alto Networks reported results that outperformed expectations, surpassing guidance in revenue, operating margins and NGS ARR. The company’s performance benefited from strength in SASE, XSIAM and virtual firewall offerings, and management attributed part of the beat to several sizable platformization deals.
Takeaway - Palo Alto Networks presented a mixed but constructive set of results: clear cash flow strength and reaffirmed full-year margin guidance coexist with some near-term softness in specific organic growth metrics, amplified by acquisition timing. Analysts’ reactions varied, producing a range of revised price targets while many maintained Buy or Overweight ratings.