Reports Of Its Demise May Prove Premature (PANW Q3 FY7/24 Earnings Review)

Reports Of Its Demise May Prove Premature (PANW Q3 FY7/24 Earnings Review)
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Palo Alto Networks Q3 FY7/24 Earnings Review

For once, I find myself without any clear view on a major tech stock. And this is because (1) the fundamentals and the technicals are truly at odds on Palo Alto Networks ($PANW) and (2) my long-held prejudice, not always helpful I should say, against box companies. (This prejudice has saved me from many falls but it also caused me to miss $SMCI).

Fundamentally Palo Alto Networks is aging gracefully, with revenue growth rates declining but cashflow margins drifting upwards and a still-fulsome order book. In tech this usually means, be careful of the stock, because the company may soon be under attack by all manner of newcomers - in cybersecurity that means Crowdstrike, ZScaler and others.

Technically, if you start the chart at the March 2020 Covid crisis lows, which increasingly looks like a sensible place to start a whole lot of longer-term charts, it looks very much like $PANW could run from the current $307 to maybe $409, a potential gain not to be sneezed at.

Normally when fundamentals and technicals clash, the technicals win. And perhaps they will do so this time too. Personally though I cannot get past the declining rates of growth and the hardwired “we make boxes” DNA (even though the company has achieved marvelous things in their subscription services in order to decouple their economics from boxes).

As always, you will decide what works for you.

Let’s now take a detailed look at PANW financials, valuation metrics, our stock rating and price targets.

Fundamental Financial Analysis