Palo Alto Networks plays its cards with M&A and artificial intelligence

Against this background, it is easy to understand why the market's focus on Palo Alto Networks. A focus that, however, must be separated from mere speculation is based on more solid foundations. First and foremost, the stock market performance. The group's stock has jumped 23% in the past year. Over the longer term - 5 years - the increase is 392%. These are positive trends which, however, tell little. It is necessary, in order to understand the real situation of the Californian company, to first compare the indicated performance with that of other companies in the sector. Not only that. Then, it is useful to look at company multiples and fundamentals. Always bearing in mind that, on the one hand, there is no solicitation of investment; and that, on the other, the do-it-yourselfer has an obligation to approach such matters with the utmost caution.

Well: Palo Alto Networks - according to the Bloomberg terminal - is not among the stocks that have rallied the most over the past 12 months. Thus, for instance, it may be recalled that Palantir literally went into orbit, posting growth of 417.4%. Cloud Fare itself shows an increase of 135.3%. Then, Fornitet and CrowdStrike increased by 80.9 and 75.2 per cent respectively. True! There are other companies in the sector that beat them to the punch: among others Sentinel One (-21.2%) and Rapid (-43%). That said, however, Palo Alto Networks - although it has entered a corrective phase in the last period - can boast a decent performance. Also because the sector basket (Nasdaq Cta cybersecurity index) - over the past year - is up 31.4%, while the Nasdaq composite has to be content with an expansion of 16.08%.

In the face of a not 'crazy' but still substantial climb, what then are the stock market multiples? Seeking Alpha, as usual, shows the indicator overview. The ratio of Price to non-GAAP earnings on 2025 is 60.13. That is to say: a high number in itself. The figure, however, is lower - and we would miss it - than Palantir's absolutely meaningless P/e, which stands at 256.13. Put differently: if, hypothetically, the projected profit was maintained in 2025, it would take more than 253 years to pay back Palantir's share price. Insane! This is higher than CrowdStrike's own multiple of 134 13 (again on 2025 and again with non-GAAP Eps). More restrained, on the other hand, is the 'Price to earnings' of Fornitet. Here the figure - provided by Seeking Alpha itself - is 42.12 times.

In the face of such a -simple- comparison with some of the competitors, the impression regarding Palo Alto Networks changes somewhat. The stock is still to be considered expensive, but not as much as it might have appeared at first. That said, remaining in the area of corporate multiples, the idea that the Californian group is not discounted is reaffirmed by other indicators. The non-GAAP PEG, for example, is higher than that of the reference sector. This is replicated in the Enterprise Value to Ebit. The situation improves, and not a little, with reference to a multiple followed by analysts in the world of hi-tech companies. Which one? The share price as a function of operating cash flow. According to Seeking Alpha, the forward-looking indicator on 2025 is worth 31.36 compared to 20.2 for the reference segment. Bottom line: Palo Alto Networks - like many other companies in the sector - is to be considered expensive, but not at meaningless levels.

So far, some suggestions on the stock's multiples on the stock exchange. There is, however, also another approach considered by the experts. That of technical analysis. "The stock, after having run a lot - explain the chartists consulted by Sole24Ore - is in a corrective phase in which, moreover, the weekly Rsi index has shown weakness". The dynamic started in mid-December last year (17/12/2024), when the share price reached the intraday value of $207. Subsequently, Paolo Alto Networks' share price fell, only to 'recover and reach - on 18/2/2025 - a high in the $208 area, which became important resistance'. From there, through three Elliot waves, "the cybersecurity group retraced to the low in the $152 area" (7/4/2025). Once again, the shares of the Californian company 'resumed their upward path and, realising the classic configuration of the five Elliot waves, they reached,' the experts explained, 'the resistance located in the $208 zone. At this point, the stock - once again - lost ground and at present it cannot be ruled out that 'it could give up the canonical 50% from the highs, reaching the $175 area'. In the moment in which it rears its head again, breaking through the resistance of 208, 'then,' the chartists conclude, 'we would have the start of a new bullish phase.

Yes, bullish phase. But what is the trend in the income statement numbers? In the last quarter - the third of the 2024-2025 fiscal year - the Californian group

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Stock performance.