Palo Alto Networks (PANW): Evaluating Valuation After Leadership Change and Strong Revenue Growth

If you hold Palo Alto Networks (PANW) or are considering a position, you’re likely aware of the buzz around the company lately. Just this month, Palo Alto Networks posted strong fourth-quarter and full-year revenue growth, increased its outlook for fiscal 2026, and signaled a new era by announcing founder and CTO Nir Zuk’s retirement, passing the torch to Lee Klarich. Taken together, these moves suggest the company is not just riding the cybersecurity wave but is also trying to position itself at the forefront of innovation with AI-powered solutions.

All this action has attracted attention. After rebounding sharply from a July dip, the stock has gained nearly 7% over the past year despite some recent volatility, while maintaining significant momentum compared to historical returns. Leadership updates, new product launches, and positive commentary within the sector have helped shift sentiment, framing Palo Alto Networks as a leading name to watch as digital security demands continue to evolve.

But with the stock already moving upward again, the main question for investors is whether this represents a genuine buying opportunity or if market expectations already incorporate Palo Alto Networks’ future growth story.

Most Popular Narrative: 10.7% Undervalued

According to community narrative, Palo Alto Networks is seen as undervalued by 10.7%. This suggests that analysts believe current market pricing does not fully reflect the company's future earnings potential and growth catalysts.

Ongoing industry consolidation, as enterprises seek to simplify and maximize the effectiveness of their security stack, has strengthened the trend towards platformization. This is resulting in larger multi-platform deal sizes, improved cross-sell, higher net retention rates (120%), and near zero churn among platformized clients. All of these factors support future margin expansion and earnings growth.

What is the secret behind this bullish view on Palo Alto Networks? The narrative points to a promising future, driven by consistent revenue growth and margin expansion built on aggressive enterprise platform deals, powerful recurring software streams, and industry-leading client retention. Curious which assumptions set this price target above the rest? Uncover the full financial story and see what numbers are fueling the optimistic outlook.

Result: Fair Value of $213.86 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent integration challenges and rising R&D expenses could impact profitability. These factors may put Palo Alto Networks’ growth assumptions to the test.

Find out about the key risks to this Palo Alto Networks narrative.

Another View: What About Cash Flows?

While many investors focus on the company's current market valuation compared to its earnings, our DCF model looks at future cash flows to estimate true value. This method suggests a different perspective. Could the market be missing something?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Palo Alto Networks for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Palo Alto Networks Narrative

If you see things differently or want to dive into the details on your own terms, crafting a personalized financial narrative takes just a few minutes. So why not Do it your way

A great starting point for your Palo Alto Networks research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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