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What Is Palo Alto Networks, Inc.'s (NASDAQ:PANW) Share Price Doing?
Today we're going to take a look at the well-established Palo Alto Networks, Inc. (NASDAQ:PANW). The company's stock received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Palo Alto Networks’s outlook and value based on the most recent financial data to see if the opportunity still exists.
See our latest analysis for Palo Alto Networks
Is Palo Alto Networks Still Cheap?
According to my valuation model, Palo Alto Networks seems to be fairly priced at around 8.4% below my intrinsic value, which means if you buy Palo Alto Networks today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $200.76, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Palo Alto Networks’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Palo Alto Networks?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Palo Alto Networks' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has already priced in PANW’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on PANW, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Case in point: We've spotted 3 warning signs for Palo Alto Networks you should be aware of.
If you are no longer interested in Palo Alto Networks, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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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.
Palo Alto Networks
Palo Alto Networks, Inc. provides cybersecurity solutions worldwide.
High growth potential and fair value.