Key Takeaways
- Palo Alto Network shares surged on Tuesday after the company reported better-than-expected quarterly results.
- Analysts who raised their price targets for the stock said the cybersecurity company’s results showed that its platform consolidation efforts were paying off.
- They also noted that Palo Alto Networks’ artificial intelligence (AI) integration initiatives showed early promise.
Palo Alto Networks (PANW) shares jumped during intraday trading Tuesday after the cybersecurity company reported stronger-than-expected earnings amid its ongoing “platformization” efforts.
Shares of Palo Alto Networks rose nearly 9% Tuesday morning, contributing to their more than 25% year-to-date gain.
Several analysts lifted their price targets on Palo Alto’s stock following the strong quarterly results. They noted the company’s platformization-related sales strength, early artificial intelligence (AI) gains, and the impact of last month’s CrowdStrike (CRWD) outage.
Platform Consolidation Strategy Paying Off
Palo Alto Networks provided investors with updates about its platformizaton strategy, where it consolidates its cybersecurity services on its platform and bundles offers to support sales. The company also noted early gains from its integration of AI.
Jefferies analysts lifted their target for the stock to $400 from $365, saying that “most importantly” the company “continues to take share via consolidation.”
Citi analysts, who raised their target to $395 from $385, highlighted that Palo Alto Networks showed investors “tangible platformization proof points.”
The cybersecurity provider reported that platformization momentum accelerated during the fiscal fourth quarter with the number of consolidated deals up 50%.
Citi Calls Palo Alto ‘GenAI Story With Real Teeth’
Palo Alto Networks’ early gains from AI integration also caught analysts’ attention.
J.P. Morgan analysts said the company showcased “early momentum in AI” with its AI-infused cybersecurity offerings. The analysts lifted their price target to $387 from $365.
Citi analysts said Palo Alto Networks represents a “GenAI story with real-teeth.”
CrowdStrike Outage May Translate to New Customers
Analysts have indicated that Palo Alto Networks along with other competitors like SentinelOne (S) could gain customers leaving CrowdStrike after a faulty update last month caused a global tech outage and cost clients billions.
“The recent outage has caused a number of customers to reevaluate their options,” Palo Alto Networks CEO Nikesh Arora said in the company’s earnings call.