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Valens Research

PANW - Embedded Expectations Analysis - 2021 06 28

Palo Alto Networks, Inc. (PANW:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 66.6x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about growth rates, their cloud security platforms, and the XSOAR product

Specifically, management may have concerns about the deal sizes for XSOAR, the proportion of customers buying multiple cloud platforms, and low annualized recurring revenue from cloud-delivered security services. In addition, they may lack confidence in their ability to maintain high growth rates and achieve billings targets. Also, they may be overstating the cybersecurity capabilities of Unit 42 and Crypsis, along with the sustainability of the strong performance of NetSec. Furthermore, they may lack confidence in their ability to utilize operating leverage, capitalize on portfolio growth opportunities, and focus on improving strategic partnership capabilities. Moreover, management may have concerns about the sustainability of strong demand, XDR coverage, and their capacity to continue winning new customers
Underlying
Palo Alto Networks Inc.

Palo Alto Networks provides a platform that allows enterprises, service providers, and government entities to secure their organizations. The company's platform uses a traffic classification engine that identifies network traffic by application, user, and content and provides security across the network, endpoint, and cloud. The company's product, subscription, and support offerings include: firewall appliances and software; and Panorama, which is a centralized security management solution for global control of various firewall appliances and software deployed on an end-customer's network as well as in their instances in public or private cloud environments as a virtual appliance or a physical appliance.

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Valens Research
Valens Research

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