TD Cowen reiterates Palo Alto Networks stock rating on strong results

TD Cowen has maintained its 'Buy' rating and set a $400 price target on Palo Alto Networks (PANW) stock following the company's impressive Q4 fiscal 2026 results. The cybersecurity firm's stock is currently trading at $362.09, with a market capitalization of $295 billion. In the quarter ending fiscal 2026, Palo Alto Networks' next-generation security annual recurring revenue surged 63% year-over-year to $9.1 billion, while total revenue grew 34% to $3.41 billion, surpassing analyst estimates.

Net earnings per share reached $1.02, outpacing the consensus estimate of $0.98. The company's platformized 220 new customers, breaking its previous record. Net revenue retention for this cohort exceeded 120%. Palo Alto Networks aims to platformize 4,000 customers by fiscal 2030, targeting $20 billion in next-generation security annual recurring revenue by that year.

The SASE offering gained market share from around 100 accounts, totaling over $400 million in contract value. Hardware firewall sales benefited from the adoption of Generation Five appliances, while software firewall annual recurring revenue grew by 29%. Prisma AIRS reached $100 million in annual recurring revenue. TD Cowen raised its fiscal 2027 revenue estimate by 2% to $14.14 billion, indicating 23% year-over-year growth.

The firm reduced its non-GAAP gross margin estimate by 85 basis points to 74.6% due to higher cloud hosting costs and decreased its operating margin estimate by approximately 30 basis points to 29.7%. Adjusted earnings per share are now projected at $4.19, a 9% increase year-over-year.