Wall Street analysts are shifting gears on Palo Alto Networks , calling the Club stock’s punishing sell-off that abated last week overdone. In recent days, there have been a series of upgrades and price target increases as the market reassesses the idea of CyberArk becoming part of Palo Alto. The deal talks were first rumored on July 29, and the stock sank 5.2%. The next day, Palo Alto officially announced its $25 billion offer to buy CyberArk, and shares lost another 5.6%. The day after that, the stock lost nearly 5.2%. The losing streak, which extended three more sessions, finally ended on Aug. 6 — but not before shares fell 17.5% on worries about the price tag of the deal. Palo Alto stock has since recovered some of those declines. Deutsche Bank, late Tuesday, was the latest to upgrade Palo Alto to a buy rating from hold. It also raised its price target to $220 per share from $200. Piper Sandler also upgraded Palo Alto stock this week to an overweight buy from neutral and increased its price target to $225 from $200. Last week, Morgan Stanley raised its price target to $496 from $380. Analysts from all three firms cited the growth potential of the CyberArk deal. Jeff Marks, director of portfolio analysis for the Club, said Wednesday that CyberArk is the “missing piece” of identity security, allowing Palo Alto to enhance its platformization strategy, which is all about getting customers to buy entire suites of products and consolidate all their cybersecurity spending under one roof. Jim Cramer doubled down Wednesday, saying Palo Alto’s bid for CyberArk was “shrewd,” given the addition of a new solution to its product portfolio. Jim called the recent weakness in Palo Alto shares a “buying opportunity,” as he first did on July 30 in the teeth of the decline. The Club finally got to buy more shares Monday, when our trading restrictions on the stock lifted. We have our buy-equivalent 1 rating on the stock and a $225 price target. In addition to the deal premium, the bears have also misinterpreted the motivation behind the CyberArk deal, assuming Palo Alto’s core business must be doing poorly. Jim said on Tuesday that such “chatter is wrong,” stressing the company “wouldn’t be buying CyberArk if their business were falling apart.” He added, “I think Palo Alto is doing incredibly well.” The company stands to do even better when considering identity security accounts for about 25% of enterprise security spending, according to Deutsche Bank. The analysts called CyberArk a “meaningful organic accelerant” to Palo Alto’s already strong business and argued the stock underperforming the broader cyber sector by 15% year to date is “overblown.” Piper Sandler analysts referred to CyberArk as a “very high-quality asset” that fills a large gap in the company’s portfolio and sees a favorable share setup from current levels. Morgan Stanley also sees the acquisition as a “clear strategic fit” given the long-term artificial intelligence security opportunity and increasing consolidation in the cybersecurity space. PANW 5Y mountain Palo Alto Networks 5 year performance Palo Alto stock has a track record of getting dinged when it makes strategic decisions. When CEO Nikesh Arora first introduced platformization in February 2024, the stock got crushed, losing more than 28% in one session and closing just below $131. The strategy has proved to be a massive success — and a year later, shares hit a record high of $208 on Feb. 18. Before the CyberArk-driven plunge, Palo Alto stock was less than $4 per share away from that record. We viewed this indiscriminate selling as short-sighted. As long-term investors in the name, it was a chance to bulk up our position at a discount. Palo Alto is scheduled to report fiscal 2025 fourth-quarter results after Monday’s close. We’ll be anxious to see the numbers and hear more about the CyberArk deal and Palo Alto’s business overall during the post-earnings conference call. Palo Alto is one of two cybersecurity companies in the Club portfolio, in recognition of the critical importance in a world of rising digital threats. The other one is CrowdStrike , which does offer identity protection services as part of its Falcon platform. We currently have a hold-equivalent 2 rating on CrowdStrike and a $520 price target. (Jim Cramer’s Charitable Trust is long PANW, CRWD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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2025-08-13 17:57:02
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