Palo Alto Networks Smashes Estimates, Stock Rockets Back to Key Level as Wall Street Turns Bullish

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Palo Alto Networks delivered an earnings report that was widely hailed as a solid beat on key metrics, prompting a sharp rebound in shares that carried the stock back to its 200-day moving average near $187. Analysts praised the results and the company’s upbeat guidance, with upgrades coming from several Wall Street firms that cited strong fundamentals, improving deal flow, and momentum in next-generation security (NGS) products. The favorable reaction suggests that investors are reassessing Palo Alto’s longer-term trajectory, even as the company continues to digest its pending CyberArk acquisition.

For the fiscal fourth quarter, Palo Alto reported revenue of $2.54 billion, up 16% year-over-year and ahead of consensus estimates of $2.50 billion. Adjusted EPS came in at $0.95, beating the $0.88 expected. Product revenue rose 19% to $574 million, surpassing estimates of 15% growth, while subscription and support revenue also showed double-digit expansion. Net income was $253.8 million, with operating margins above 30% for the first time in company history. Free cash flow margins reached 37%, making Palo Alto a “Rule of 50” company for the fifth consecutive year. The breadth of the beat, both on revenue and profitability, underlined the success of Palo Alto’s push toward software-driven products and its broader “platformization” strategy.

Key growth metrics also came in strong. Remaining performance obligations (RPO) rose 24% to $15.8 billion, beating Wall Street’s expected 20% increase. NGS annual recurring revenue (ARR) grew 32% year-over-year to $5.6 billion, slightly ahead of forecasts, while net new NGS ARR reached $490 million, up 14% from the prior year. Analysts highlighted that deal activity was robust, with 1,400 platform deals signed in the quarter. Importantly, software accounted for 56% of product revenue, up sharply from 44% a year ago, signaling that Palo Alto is successfully shifting its business toward higher-margin recurring models. Geographically, performance was balanced, with revenue up 15% in the Americas, 19% in EMEA, and 13% in JPAC.

The company’s guidance further reinforced the bullish case. For fiscal 2026, Palo Alto expects total revenue of $10.48–$10.53 billion, above consensus of $10.43 billion. Adjusted EPS is forecast in the range of $3.75–$3.85, well ahead of expectations of $3.67. NGS ARR is projected to grow 26–27% to around $7.0–$7.1 billion, while RPO is set to expand another 17–18% to $18.6–$18.7 billion. Management also guided for non-GAAP operating margins of 29.2–29.7% and free cash flow margins of 38–39%. For Q1 specifically, the company called for 15% revenue growth, adjusted EPS of $0.88–$0.90, and NGS ARR expansion of nearly 30%. These figures not only exceeded consensus but also suggested momentum heading into the new fiscal year.

Analysts were quick to respond positively. BMO Capital raised its price target to $225, citing Palo Alto’s robust FY26 outlook and long-term targets, including pro forma free cash flow margins of 40% by FY28, inclusive of CyberArk. Bank of America upgraded the stock to Buy from Neutral with a $215 target, emphasizing that NGS ARR growth of 32% and RPO growth of 24% demonstrated the strength of Palo Alto’s model. Piper Sandler maintained an Overweight rating and $225 price target, noting that bookings growth accelerated to 35% versus just 9% in the prior quarter, while new customer additions and platform deals both increased. Wells Fargo raised its target to $235, saying Palo Alto is positioning itself as the most comprehensive platform provider in cybersecurity, particularly after the CyberArk acquisition.

Deal flow and customer behavior were also points of focus. Management said customers are increasingly committing to multi-product platforms, with average contract durations lengthening slightly to around three years. The quarter’s performance showed broad-based demand across verticals, with public sector bookings improving notably. AI-related ARR was called out as a growth driver, reaching $545 million, more than double the level from a year earlier. CEO Nikesh Arora said the results reflected a market shift toward integrated cybersecurity solutions, with customers recognizing that fragmented defenses are insufficient against modern threats.

On the outlook, Palo Alto stressed that the fiscal 2026 guidance does not include contributions from CyberArk, which it expects to close in the second half of the year. Management highlighted that the deal will accelerate its push into identity and privileged access management, complementing its existing portfolio. Long-term targets for the combined company include free cash flow margins above 40% by FY28. Analysts broadly endorsed the acquisition as strategically sound, with Mizuho calling CyberArk a “phenomenal asset at a reasonable price.”

The positive results come after a period of stock underperformance following the CyberArk deal announcement, which had weighed on sentiment. Shares had fallen about 15% in the weeks after the news, but the strong quarter appears to have reset expectations. The stock surged 6–7% after earnings, testing resistance at its 200-day moving average of $187, where it has lingered. Analysts argued that given the strong fundamentals and elevated importance of cybersecurity in an AI-driven environment, Palo Alto’s shares may have room to recover lost ground.

In summary, Palo Alto Networks’ latest earnings confirmed that its platformization strategy is working, with strong top-line growth, margin expansion, and rising recurring revenue. Robust deal activity and geographic breadth reinforced confidence, while guidance for FY26 and beyond exceeded expectations. With analysts upgrading ratings and targets, and with the shares recovering back to a key technical level, Palo Alto enters the new fiscal year with momentum on its side and a compelling case for investors looking for durable growth in the cybersecurity space.