Palo Alto Networks Stock Slides After Back-To-Back Downgrades But Retail Stays Upbeat
By Stocktwits Inc | First Published Jan 9, 2025, 12:03 AM ISTBTIG analyst Gary Powell said he sees limited upside to Street’s annual recurring revenue estimates for 2025.
Cybersecurity company Palo Alto Networks, Inc.’s ($PANW) stock fell over 3% by mid-session on Wednesday after two analysts downgraded the stock, citing a muted forward outlook.
BTIG and Deutsche Bank analysts gave up their bullish stance on Palo Alto Networks stock and stepped to the sidelines, TheFly reported.
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Growth Deceleration
BTIG analyst Gary Powell downgraded the stock to ‘Neutral’ from ‘Buy’ and removed the price target. After reviewing its core network security target market and drivers within its high-growth next-generation security (NSG) platform business, the analyst no longer thinks the company is poised to grow more than 15%, as forecasted earlier.
The firm also said it sees limited upside to Street’s annual recurring revenue (ARR) estimates for 2025. It expects the NGS segment to decelerate at a faster-than-expected pace in fiscal years 2026 and 2027 as it laps the benefits of the traditional attached firewall subscriptions.
Tough 2025
Deutsche Bank’s Brad Zelnick downgraded Palo Alto Networks stock to ‘Hold’ from ‘Buy’ and reduced the price target to $190 from $207.
The analyst sees 2025 to be a tough year for cyber consolidators. He said customer preference is tilting toward "best-of-breed over best-of-suite within cyber." The year will likely see a tougher operating environment for Palo Alto against "lofty investor expectations that seemingly embed persistent consolidation tailwinds," he added.
Palo Alto Networks stock also snagged a downgrade on Tuesday as Guggenheim Securities downgraded the stock to ‘Sell,’ citing declining ARR.
However, retail mood remained buoyant. On Stocktwits, sentiment toward Palo Alto Networks turned ‘extremely bullish’ (96/100), the highest in over a year. Message volume improved to ‘extremely high.’
A retail watcher of the stock said the pullback has brought valuation to attractive levels.
Another said they would buy and hold the stock as it has dipped to oversold territory. A few others surmised that prominent Congressional trader and House Rep. Nancy Pelosi (D-Calif) may have liquidated her holdings.
The stock gained over 23% in 2024. A 2:1 stock split announced by the company took effect on Dec. 16.
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