Palo Alto Networks rally gets fresh analyst fuel
Capital One and Tigress analysts see more room for Palo Alto Networks after a three-month surge in cybersecurity stocks.
By Sal Moretti · Money Reporter
3 min read
Palo Alto Networks has already ripped higher, and two Wall Street analysts say the cybersecurity trade may still have legs.
The company’s shares have roughly doubled over the past three months, according to MarketWatch, as investors have warmed to the idea that artificial intelligence is increasing the need for stronger digital defenses. CrowdStrike has made a similar move over the same stretch, the report said.
The latest push came from Capital One analyst Connor Murphy, who raised Palo Alto Networks to overweight from equal weight on Thursday. He also lifted his price target to $421 from $307, citing the company’s potential to benefit from data-center expansion and a shift in corporate budgets toward cybersecurity.
Murphy’s upgrade lands as investors pay closer attention to cyber risk tied to AI, geopolitical tensions and government spending. MarketWatch reported that cybersecurity bulls have argued for months that AI-driven attacks and threats linked to actors in the Middle East could boost demand across the sector.
IBM comments put cyber stocks in focus
International Business Machines also helped put the issue on investors’ radar. IBM Chief Executive Arvind Krishna told shareholders Tuesday that customers had been “distracted” by “rapidly evolving, industry-wide cybersecurity concerns,” according to MarketWatch.
Citizens analyst Rustam Kanga told MarketWatch that Krishna’s comments helped lift cybersecurity stocks broadly.
Murphy said Palo Alto Networks is well placed because of its role as a consolidator in cybersecurity. He pointed to the company’s emphasis on “platformization,” a strategy built around bringing multiple security products into one platform.
He also said the federal government’s push to strengthen cybersecurity should support the company.
Okta also gets an upgrade
Capital One’s upbeat call was not limited to Palo Alto Networks. Murphy also upgraded Okta to overweight from equal weight and raised his target price to $171 from $126.
Murphy cited Okta’s partnerships with other cybersecurity companies and said he expects the identity-management company to deliver a “solid beat” when it reports earnings in August, according to MarketWatch.
Tigress Financial Partners analyst Ivan Feinseth also increased his expectations for Palo Alto Networks. On Wednesday, Feinseth kept his buy rating and raised his 12-month target to $430 from $245.
Feinseth told MarketWatch that Palo Alto Networks’ next-generation security platform uses AI and combines network, cloud, security-operations and identity/trust tools into a single prevention-focused setup. He said the approach replaces separated, reactive tools with integrated and automated protection.
Feinseth also pointed to Palo Alto Networks’ February acquisition of Israeli identity-security platform CyberArk, saying the deal makes identity security a core part of the company’s software stack.
Russia warning adds to demand case
The broader threat backdrop remains a major part of the investment argument. MarketWatch reported that rising cyber threats from Russia, China and the Middle East are helping drive demand for cybersecurity services.
On Tuesday, the Cybersecurity and Infrastructure Security Agency released a joint report with the National Security Agency, the FBI and other agencies warning about Russian cyber-threat activity.
Palo Alto Networks shares were down 0.55% in the MarketWatch snapshot, while IBM was up 3.08% and Okta was down 0.86%.
This story draws on original reporting from MarketWatch.