Palo Alto Networks Shares Drop 7.4% After Analyst Downgrade

Palo Alto Networks, Inc. (NASDAQ: PANW) experienced a significant decline of 7.4% on Thursday, following a downgrade from HSBC Global Research. The firm adjusted its rating from “hold” to “moderate sell,” causing the stock price to drop to a low of $183.20 before closing at $185.07. Trading volume surged to approximately 15,900,980 shares, which is a remarkable 157% increase compared to the average daily volume of 6,182,770 shares.

The previous closing price for Palo Alto Networks was $199.90. This downgrade comes amid a flurry of mixed analyst opinions. While HSBC has taken a more cautious stance, other firms have maintained or even increased their target prices. For instance, Oppenheimer reaffirmed an “outperform” rating with a target of $245.00, while Evercore ISI raised its target from $220.00 to $250.00, also assigning an “outperform” rating.

Mixed Analyst Ratings Fuel Market Activity

On the same day, DA Davidson increased its price target for Palo Alto Networks from $215.00 to $240.00, maintaining a “buy” rating. Additionally, The Goldman Sachs Group reiterated its “buy” rating with a target price raised from $236.00 to $240.00. Barclays also adjusted its price target from $215.00 to $230.00 while giving the stock an “overweight” rating.

Overall, thirty equity research analysts have rated the stock as a buy, while nine have issued a hold rating, and two have given sell ratings. According to data from MarketBeat, the stock currently holds a consensus rating of “Moderate Buy” with a target price of $225.09.

Institutional Investors Adjust Holdings

Recent movements among institutional investors indicate ongoing interest in Palo Alto Networks. Klingman & Associates LLC raised its stake by 2.2% during the third quarter, bringing its total ownership to 2,131 shares valued at approximately $434,000. Similarly, Contravisory Investment Management Inc. increased its holdings by 1.8%, owning 2,742 shares worth $558,000.

Other notable changes include Mattern Wealth Management LLC, which grew its stake by 2.9%, now owning 1,692 shares valued at $345,000. Astoria Portfolio Advisors LLC also lifted its stake by 2.1% during the same period. Currently, institutional investors and hedge funds collectively own 79.82% of the company’s stock.

Palo Alto Networks’ stock is currently trading with a fifty-day moving average price of $208.77 and a 200-day moving average price of $197.31. The company boasts a market capitalization of $125.10 billion, with a price-to-earnings ratio of 115.76 and a beta of 0.95.

The cybersecurity firm recently reported its quarterly earnings on November 19, 2023. The results showed earnings per share (EPS) of $0.93, surpassing the consensus estimate of $0.89 by $0.04. The company generated revenue of $2.47 billion, exceeding analysts’ expectations of $2.46 billion and marking a 15.7% increase compared to the same quarter last year.

Looking ahead, Palo Alto Networks has set its fiscal year 2026 guidance at an EPS range of $3.800 to $3.900, with a second quarter 2026 guidance of $0.930 to $0.950. Analysts project that the company will post an EPS of $1.76 for the current year.

Palo Alto Networks continues to be a key player in the cybersecurity sector, providing a range of solutions including firewall appliances, security management tools, and various subscription services aimed at threat prevention and data security. The company’s comprehensive offerings ensure its relevance in a rapidly evolving digital landscape.