Seeking Alpha: Strong Share Growth And Margins Fueling Palo Alto Networks

By most reasonable metrics, Palo Alto Networks (NYSE:PANW) has a gravity-defying valuation. Then again, there's nothing particularly "reasonable" about the market share that Palo Alto is gaining within the growing security space, nor the company's strong positioning across a variety of technologies. If Cisco (NASDAQ:CSCO) and Check Point (NASDAQ:CHKP) can't do a better job of repositioning themselves to the leading edge of threat prevention, they are likely to continue to be involuntary share donors in the security market.

I am not going to argue that Palo Alto is cheap per se. I will say this, though - if Palo Alto can grab 15% share of the enterprise network and endpoint security market in 2019 (and the market continues to grow at a mid to mid-high single-digit rate) and generate 30%+ FCF margins, a $180 fair value is not unreasonable. If the company can reach 20%, the target can move above $200.

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Strong Share Growth And Margins Fueling Palo Alto Networks