Palo Alto Networks Looks Undervalued As The Transition To Next-Gen Solutions Ramps

High multiples make for jittery investors, and even though I believe Palo Alto Networks (PANW) is undervalued, the shares do still trade at high multiples and with high embedded expectations. I believe Palo Alto management has made sound strategic moves in positioning the company for next-gen security priorities like cloud, integration/automation, and analytics, but the reality is that the next year or so could still be lumpy, and that’s not going to be great for investors who don’t like a lot of drama in stock price performance.

Although Cisco (CSCO) has improved its security business and Palo Alto has to contend with up-and-comers like Zscaler (ZS), I expect platforms like Prisma, Cortex, VM, and Demisto to drive meaningful growth that isn’t fully reflected in the share price. I consider Palo Alto a higher-risk stock, and I’m concerned about the overall level of software stock valuations, but I believe these shares should trade closer to $240 to $250.

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Palo Alto Networks Looks Undervalued As The Transition To Next-Gen Solutions Ramps