Palo Alto Networks, Inc. (NASDAQ:PANW) is one of the Hot AI Stocks on Wall Street’s Radar. On August 6, Bernstein SocGen Group analyst Peter Weed lowered the price target on the stock to $204.00 (from $225.00) while maintaining an Outperform rating.
The firm reviewed the $25b CyberArk acquisition and ultimately views it positively despite intial negative investor reaction. It believes the deal has long-term strategic benefits that outweigh short-term dilution and market volatility.
“Is the CyberArk deal accretive? Last week Palo Alto announced their intention to acquired CyberArk in a cash + equity deal worth ~$25B at the then-PANW stock price (~$5B premium) — this would be an effective FCF/share dilution of ~6% + $2B cash and any restructuring costs. Since then, investors reacted negatively and PANW’s market captalization lost the equivalent to CyberArk’s predeal value (~$20B). After exploring the deal potential, we come away more constructive. We find these worries half-baked. Channel checks continue to confirm platformization resonates.”
The firm further noted how CyberArk is a strong player and is considered an AI winner. The current gap in their portfolio will be closed through this deal.
“Instead, we believe the strategy to enter Identity closes the remaining gap in their portfolio. It also offers a rare toehold in an AI-winner cyber category. The deal is large because CyberArk covers all the key parts to enter, is a strong player, and is considered an AI winner. Assuming Palo Alto stays on strategy, there aren’t other large portfolio gaps (thus large targets) to acquire.”
Palo Alto Networks, Inc. (NASDAQ:PANW) is a leader in AI-powered cybersecurity.
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