Palo Alto Networks Shares Drop 7.4% Following Analyst Downgrade

Shares of Palo Alto Networks, Inc. (NASDAQ: PANW) experienced a significant decline of 7.4% on Thursday after HSBC Global Research downgraded the stock from a hold rating to a moderate sell rating. The stock reached a low of $183.20 during the trading session and closed at $185.07, down from a previous close of $199.90. The trading volume surged to approximately 15,900,980 shares, a remarkable increase of 157% compared to the average daily volume of 6,182,770 shares.

Several analysts have weighed in on the stock following the downgrade. Oppenheimer reaffirmed an “outperform” rating and set a price target of $245.00. In a report issued on the same day, Evercore ISI raised their price target from $220.00 to $250.00, also maintaining an “outperform” rating. Similarly, DA Davidson increased their price target from $215.00 to $240.00 with a “buy” rating. The Goldman Sachs Group reiterated a “buy” rating and adjusted their target price from $236.00 to $240.00. Furthermore, Barclays raised its target price from $215.00 to $230.00 and assigned an “overweight” rating in a report released on November 10, 2023.

In total, thirty equity research analysts have rated Palo Alto Networks, with 30 providing a Buy rating, 9 a Hold rating, and 2 a Sell rating. According to data from MarketBeat, the stock currently holds a consensus rating of “Moderate Buy” and a consensus target price of $225.09.

Institutional Investor Activity

Recent reports indicate that hedge funds have been adjusting their stakes in Palo Alto Networks. Klingman & Associates LLC increased its holdings by 2.2% during the third quarter, owning 2,131 shares valued at approximately $434,000 after acquiring an additional 46 shares. Contravisory Investment Management Inc. raised its stake by 1.8%, now holding 2,742 shares worth around $558,000 following the purchase of 48 shares. Mattern Wealth Management LLC also grew its holdings by 2.9% during the same quarter.

Moreover, St. Clair Advisors LLC boosted its stake by 0.3% in the second quarter, now owning 15,800 shares valued at $3,233,000 after acquiring an additional 50 shares. Additionally, Astoria Portfolio Advisors LLC increased its investment by 2.1%, owning 2,467 shares worth approximately $496,000. Collectively, institutional investors and hedge funds own 79.82% of the company’s stock.

Recent Financial Performance

Palo Alto Networks reported its quarterly earnings on November 19, 2023. The company announced earnings per share (EPS) of $0.93, exceeding the consensus estimate of $0.89 by $0.04. Revenue for the quarter reached $2.47 billion, slightly above analysts’ expectations of $2.46 billion. The company recorded a return on equity of 17.05% and a net margin of 11.69%. This revenue marked a 15.7% increase compared to the same quarter last year, when the company posted EPS of $1.56.

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

Palo Alto Networks continues to be a leader in providing cybersecurity solutions globally. The company specializes in firewall appliances and software, along with a security management solution called Panorama. Their extensive suite of subscription services includes offerings in threat prevention, malware protection, and security for mobile devices, among others.