Palo Alto Networks Inc (NYSE:PANW, ETR:5AP)’s recent earnings report was “impressive on all fronts,” analysts at Bank of America said Tuesday, pointing to strong fundamentals and better-than-expected fiscal 2026 guidance.
“At a high level, the company’s strategy appears to be working well, with 1,400 platform deals, and software is driving up growth, accounting now for 56% of product revenues vs. 44% last year,” Bank of America analysts wrote in a note.
That prompted analysts to upgrade the cybersecurity company to “Buy,” citing good fundamentals and stronger-than-expected growth in key areas.
The brokerage highlighted that next-generation security annual recurring revenue (NGS ARR) rose 32.2% year-on-year, remaining subscription performance obligations increased 24.4%, and product revenue grew 19.4%.
Shares of Palo Alto were up 4% on Tuesday afternoon.
The firm maintained its price objective of $215, implying 22% upside, after shares had fallen around 15% following Palo Alto’s acquisition of CyberArk.
“With the stock down about 15% from the date of CyberArk M&A announcement, and given the solid fundamentals, we are upgrading from Neutral to Buy,” the analysts wrote.
Bank of America also pointed to strength in Palo Alto’s platform deals and software products, with Cortex and Prisma Cloud ARR up 25% year-on-year, and product momentum in areas such as virtual firewalls and firewall-as-a-service.
However, the analysts flagged risks around valuation and margins. “The risks to our rating are mainly around concerns we’ve highlighted in the past regarding peaking margins and valuation limitation,” they said, noting the company’s forecast of a 38.5% free cash flow margin in FY26 and the stock’s multiple of roughly 46 times estimated 2026 earnings.