Company name: Palo Alto Networks
Current Price: $241.06
Target Price: $276
Yield potential: 14.5%
Palo Alto Networks Profile
Palo Alto Networks is one of the key players in the segment of cybersecurity. The company offers a wide range of solutions to provide an all-in-one business data protection. The main product by Palo Alto is a platform that includes advanced firewalls and cloud apps. The company operates in more than 150 countries and provides its services for more than 60,000 customers, including 85 which are listed in Fortune 100.
What's the idea?
The idea is to capitalize on a potential rally as the company evolves into an all-in-one cloud cybersecurity provider and is growing rapidly.
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Why do we like Palo Alto Networks?
Reason 1. Strong positions in the market
For seven years in a row, Palo Alto has been recognized by Gartner as the leader in the firewall segment with the best value offer for users. According to IDC, Palo Alto has a 13.4% share of the hardware solutionsʼ market in the firewall segment. This puts it into the second place after Cisco. Since 2013, the issuer has increased its market share 2.5 times — from 5.4%, while the share of Cisco increased only from 14.4% to 15.8%. In the segment of next-generation firewalls the company offers one of the best industry products — Strata — that includes the firewall itself, a control console as well as the subscription for cybersecurity solutions.
Reason 2. Rapid development and transition to the cloud
Palo Alto is intensively working on the development of cloud cybersecurity solutions. For successful implementation of this strategy the company carried out a number of M&A transactions in 2019. In particular, PureSec (serverless application security platforms), Twistlock (serverless, cloud and container application protection), Demisto (security event and automatic response management), Evident.io (cloud infrastructure cyber protection) were absorbed. Besides that, Palo Alto is committed to developing positions in the SD-WAN sub-segment of the market. To achieve that, the company bought CloudGenix for $420M in 2020. This transaction also allowed the company to strengthen hand in the SASE segment (border services for secure access). According to Gartner estimates, about 60% of companies will use SD-WAN by 2024, compared to 20% at year-end 2019.
Reason 3. Strengthening position thanks to creating an all-in-one solution
In the mid-term, we expect Palo Alto to significantly strengthen its position in the cybersecurity services market through further integration of key products into a single set of solutions. This integration will expand the target market, increase the value offer, and improve the marginality of Palo Altoʼs operations.
Reason 4. Emerging markets
The company operates in actively expanding marketing sub-segments.
● According to mordorintelligence.com estimates, network firewall market will be expanding by an average of 13% annually in 2020-2025.
● Unified Threat Management is another market sub-segment in which the company is also one of the market leaders (according to Gartner). According to grandviewresearch.com estimates, annual average growth rate in network firewall market will be expanding by 14.5% in 2019-2025.
● According to Palo Alto estimates, the segment of cloud security solutions will increase to $ 25Bn by 2022 with annual average growth rate of 21.2% from 2018.
Reason 5. Industry growth
In the long term, Palo Alto shares are attractive to investors thanks to the active development of the cybersecurity industry. The company is holding leading market positions in the industry and expanding its foot print in the market.
How to use the idea?
- Buy shares with BAS ticker for $241.06
- Allocate not more than 3-4% of your limit for mid-term transactions per position.
- Lock in your position when shares reach the price of $276.
How to buy the shares of Palo Alto Networks?
This can be done in two ways:
Through Freedom24 trading web platform. Type in “Palo Alto” or “PANW” (Paolo Alto company ticker at NYSE) in “Web terminal” section and select “PANW.US” from search results. Then open a security session, select the required number of shares and click the “Place a purchase order” button.
Through Freedom24 app for iPhone. Click the search icon in the top right corner of the “Quotes” window. Type in “Palo Alto” or “PANW” (Paolo Alto company ticker at NYSE) in the search box that appears and select “PANW.US” from search results. Palo Alto share will be added to the market watch - click on it and select the “Order” tab from the opened card. Select the required number of shares and click the “Place a purchase order” button.
If you don`t have an account yet, set it up right now — remotely, in 10 minutes. To do this, it is enough to fill out a short questionnaire and go through the process of verification.
Invest in Palo Alto shares and capitalize on a rapid development of one of the leaders in the segment of cybersecurity!
Buy the shares of Palo Alto Networks >>
*Additional information is available upon request. Investment in securities and other financial instruments always involves risks of capital loss. The Client should make himself aware at his own accord, including to familiarize himself with Risk Disclosure Notice. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Commissions, fees or other charges can diminish financial returns. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and do not constitute an investment advice service. The recipient of this report must make their own independent decisions regarding any securities or financial instruments mentioned herein. Information has been obtained from sources believed to be reliable by Freedom Finance Cyprus Ltd or its affiliates and/or subsidiaries (collectively Freedom Finance). Freedom Finance do not warrant its completeness or accuracy except with respect to any disclosures relative to the Freedom Finance and/or its affiliates and the analyst’s involvement with the issuer that is the subject of the research. All pricing is indicative as of the close of market for the securities discussed, unless otherwise stated.