Palo Alto Networks expected to post strong quarter as platform strategy gains traction
Published: 14:11 20 May 2025 EDT
Cybersecurity firm Palo Alto Networks Inc (NYSE:PANW, ETR:5AP) is expected to report strong fiscal third-quarter results after the bell on Tuesday, driven by rising enterprise demand and the company’s expanding platformization strategy, according to a note from Wedbush.
Wedbush, which maintains an “Outperform” rating and a $225 price target on the stock, said Palo Alto is one of its top cybersecurity picks over the next 12 to 18 months. The firm likened the company to the “Karl-Anthony Towns of Cybersecurity,” pointing to consistent execution and an increasing flow of large deals as it pushes toward consolidating its offerings into a unified platform.
“We are expecting to see strong cybersecurity deal activity across enterprises,” Wedbush analysts wrote, citing a more stable pipeline of cloud-based, platformized deals that will be central to Palo Alto’s growth strategy heading into fiscal 2026.
Palo Alto’s broader push to simplify cybersecurity vendor relationships for customers appears to be resonating, with Wedbush flagging improved field activity and momentum in deployments of its flagship tools, including XSIAM and Cortex XDR. These technologies are core to the company’s Next-Gen Security (NGS) platform, which Palo Alto is targeting to reach $15 billion in annual recurring revenue (ARR) by 2030.
For the quarter ended in April, Palo Alto has guided to NGS ARR of $5.03 billion to $5.08 billion, up 33% to 34% year over year. Remaining performance obligations are expected to come in between $13.5 billion and $13.6 billion, up 19% to 20%.
Wedbush said the Street’s current expectations and Palo Alto’s guidance “remain beatable” as more enterprises seek to consolidate vendors and scale cybersecurity capabilities through AI-powered solutions.
The firm also highlighted Palo Alto’s recent AI suite launch — which includes offerings in access, security posture management, and runtime — as a potential catalyst for increased customer adoption and higher ARR per client.
“We believe cybersecurity is a direct benefit of the AI revolution,” the analysts wrote. “Palo Alto is well positioned to see incremental deal flow as more strategic enterprise AI projects take hold over the coming year.”
Palo Alto expects full-year revenue to rise 14% year over year.
