Palo Alto Analysts Drive it to New Highs: 50% Upside Is Possible

Key Points

• Palo Alto Networks' stock price is on track for a technical break out that could add another 50% to its stock price within 12 months.
• Analysts are raising their targets and leading the stock to a new all-time high.
• Platformization is driving business and wider margins in 2024 - trends that are expected to continue in 2025. 

Palo Alto NASDAQ: PANW stock action still has a hurdle to cross at the all-time high, but it should be crossed soon because of a significant shift in the analysts' sentiment.

Analysts trimmed targets earlier this year as fears of platformization and freebies cut into the outlook for this cybersecurity stock. But that trend is over now, and positive revisions are the story.

MarketBeat has tracked 28 revisions since the Q2 results were released, and they say this stock will hit a new all-time high within the next 12 months. That is significant but more significant because of the technical price action accompanying it, which suggests a continuation of existing, long-term trends and potential for a 50% upside. 

The Q2 results reassured the analyst community because the signs are strong that platformization is working to drive business and widen the margin. The takeaway is that 28 of the 42 analysts tracked by MarketBeat, or 65%, issued a revision, with 90% raising their price targets. The two outliers reiterated targets above the consensus. 

The high number of analysts tracking the stock and the high number of revisions show a significant conviction in the rating and price outlook, which is bullish for the market. The consensus of 42 analysts implies a 5% upside for the market. The consensus of the revisions adds another 5% to it, and most of them lead to the high-end range. Nearly 70% of the revisions have this market trading above $387, which is good for an all-time high on this Moderate Buy-rated cybersecurity stock. 

Palo Alto Networks Forms an Ascending Triangle: Break Out Imminent

The technical chart pattern aligns with the trends in analysts' sentiment. It shows an uptrend marred by correction, with price action heading higher now, supported by results and the resumption of positive revisions. The takeaway is that the market is tracing out a potential flat-topped triangle and is now on track to retest the critical resistance point. If broken, the triable will signal a continuation of existing trends and bring targets into play based on the magnitude of price movements leading up to the breakout. In this case, two projections are based on the 2023/2024 rally; they forecast price movements of $100 to $200, which give targets of $484 to $584 or potential gains ranging from 25% to 50% from the $385 resistance target. 

Institutional activity also aligns with this outlook. For the last year, institutions have bought PANW stock on balance, with the balance of activity bullish in Q4 2023 and Q12024, turning bearish in Q2 and reverting to buying in Q3. Assuming that trend remains in place, the market for PANW stock has a strong tailwind to support it. The price action may fall back to the long-term EMAs or uptrend line, but institutions should step in to buy, and there are other forces supporting the market. 

Palo Alto Networks was recently purchased by Marjorie Taylor Greene (R-GA), making the fourth purchase of PANW stock by a member of Congress this year. Other purchases include Nancy Pelosi (D-CA) in February and William R. Keating (D-MA) in January. The total purchased by Congress members is small but telling given the track record and increasing amounts of investor dollars allotted for tracking them: members of Congress tend to outperform the broad market, possibly because of insider knowledge of political drivers (and hurdles) to business. 

Palo Alto Networks Has a Low Bar to Beat in FQ1

Analysts are raising their estimates for Palo Alto’s FQ1 results, but the bar is still low. The consensus forecasts a sequential decline and year-over-year gains to hold steady at 12% despite the 43% gain in next-gen technology and a 20% increase in Remaining Performance Obligations (RPO). This shows that platformization is working and business growth is re-accelerating. Assuming the Q1 results confirm this outlook, shares of PANW could break out of the triangle pattern before year end.