Palo Alto Networks, Inc.

(NASDAQ Global Select)
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Somewhat Bullish +45

PANW Plunges 20% in 6 Months: Time to Hold or Book Profits? - Zacks Investment Research

AI-generated analysis

πŸ“‰ PANW shares have dropped roughly 20% in six months amid concerns over equity dilution from the CyberArk acquisition.

πŸ’° Management lowered fiscal 2026 EPS guidance to $3.65-$3.70, down from the prior range of $3.80-$3.90 per share.

πŸ“‰ Analyst consensus estimates for fiscal 2026 and 2027 EPS were revised downward by 11 cents and 25 cents respectively in the last 30 days.

πŸš€ SASE was the fastest-growing segment in Q2 fiscal 2026, with Annual Recurring Revenue surging 40% year over year.

🀝 A global automotive leader selected PANW for a major security transformation deal valued at over $50 million.

πŸ’» Another global technology supplier chose PANW for a $40+ million initiative to modernize security operations globally.

πŸ“Š PANW sold more than 9 million secure browser licenses in the second quarter of fiscal 2026.

🏒 Over 1,500 new customers were added in the quarter, with approximately 10% coming from Global 2000 enterprises.

πŸ“ˆ Revenue growth forecasts remain strong at around 21.5% for fiscal 2026 and 19% for fiscal 2027.

βš–οΈ PANW trades at a higher P/S multiple than Check Point Software (6.01X) but lower than CrowdStrike.

Bullish Signals
  • SASE is the fastest-growing segment with Annual Recurring Revenue increasing 40% year over year in Q2 fiscal 2026.
  • The company secured a major $50+ million deal with a global automotive leader for security transformation and XSIAM operations.
  • A global technology supplier committed over $40 million to modernize security operations using PANW's XSIAM platform.
  • PANW sold more than 9 million secure browser licenses in the second quarter of fiscal 2026.
  • The company added over 1,500 new customers in the quarter, with strong adoption among Global 2000 enterprises.
  • Long-term revenue growth is forecast at approximately 21.5% for fiscal 2026 and 19% for fiscal 2027.
  • Strong demand for cybersecurity solutions across enterprises continues to support PANW's long-term growth potential.
Risk Factors
  • Equity dilution from the CyberArk deal is expected to significantly hurt PANW's bottom line in fiscal 2026.
  • Management lowered fiscal 2026 EPS guidance to $3.65-$3.70, down from the prior range of $3.80-$3.90 per share.
  • Analyst consensus estimates for fiscal 2026 and 2027 EPS were revised downward by 11 cents and 25 cents respectively over the past 30 days.
  • Share dilution is described as meaningful, which could impact per-share metrics in the near term.
Full Analysis
Palo Alto Networks (PANW) shares have declined approximately 20% over the last six months, prompting analysis on whether investors should hold or sell. The primary driver of this underperformance is significant equity dilution expected in fiscal 2026 due to a major CyberArk acquisition, which involved issuing 112 million new shares. Consequently, management has lowered its fiscal 2026 earnings per share (EPS) guidance to a range of $3.65-$3.70, down from the previously guided $3.80-$3.90. Analyst consensus estimates for PANW's fiscal 2026 and 2027 EPS have also been revised downward by 11 cents and 25 cents respectively over the past month. Despite these near-term headwinds, the company maintains a strong long-term growth trajectory supported by its diverse product portfolio and expanding market share in key areas like Zero Trust and Secure Access Service Edge (SASE). In the second quarter of fiscal 2026, SASE emerged as the fastest-growing segment with Annual Recurring Revenue increasing 40% year over year. Recent major wins include a global automotive leader signing a deal worth over $50 million for security transformation and a global technology supplier committing more than $40 million to modernize operations. PANW also reported selling over 9 million secure browser licenses in the quarter, adding 1,500 new customers with strong adoption among Global 2000 enterprises. Revenue growth forecasts remain robust at approximately 21.5% for fiscal 2026 and 19% for fiscal 2027, though the stock currently trades at a higher price-to-sales multiple than peers like Check Point Software.