Palo Alto Networks Inc (NYSE:PANW, XETRA:5AP) is likely to top fiscal fourth-quarter expectations on remaining performance obligations, annual recurring revenue and total revenue, with product growth potentially reaching 18% year-over-year versus consensus, according to Jefferies.
Shares have climbed 30% since third-quarter results, well ahead of the 5% gain in the iShares Expanded Tech-Software ETF, raising the bar for this print.
Jefferies still expects management to guide fiscal 2027 revenue growth above the current consensus of 21% year-over-year, and has confidence in more than $6.4 billion of free cash flow in FY28, supporting its $450 price target.
Channel checks support the setup. Jefferies' VAR survey showed Palo Alto's average performance versus plan rising to positive 4.8% from positive 1.8% quarter-over-quarter, while Fortinet's 52% product growth in its own blowout quarter is seen as a positive read-across. SASE remains the top growth area flagged in the survey, followed by identity and cloud security, both now part of Palo Alto's portfolio.
CyberArk was the outlier, with performance versus plan falling to 0.9% from 3.8%, which Jefferies said may reflect rebranding or resellers folding its results into Palo Alto's.
The F4Q ARR guide of $8.9 billion to $8.95 billion implies 28% organic growth, an acceleration from F3Q's 17% despite a tougher comparison. Jefferies views this as achievable given strong survey work, comparable strength from CrowdStrike, Fortinet and Okta, and record ARR tied to hardware backlog.
On FY27, Jefferies called consensus revenue growth of 21.1% "easily attainable," noting pro forma revenue across Palo Alto, Chronosphere and CyberArk grew 17.4% year-over-year through the first three quarters of FY26.
The firm also expects Palo Alto to guide FY27 next-generation security ARR at least in line with, and potentially above, consensus expectations of $10.9 billion, up 22% year-over-year.