As demand for cybersecurity software continues to boom, Palo Alto Networks (PANW) rose over 12% due to better-than expected earnings for the three months ended July 31.
If you’re unfamiliar, Palo Alto Networks is a leading provider of cybersecurity solutions, serving over 80,000 international, enterprise customers. The company’s stock has been on a tear in recent years, rising from around $40 in early 2016 to over $560 today. Despite this impressive run, Palo Alto Networks stock still looks like an excellent buy.
First, the company is a leader in the fast-growing cybersecurity market. Palo Alto Networks is well-positioned to benefit from the continued growth of the cybersecurity industry, which is being driven by the increasing frequency and sophistication of cyber attacks.
Second, Palo Alto Networks has a strong product portfolio. The company’s flagship product, Palo Alto Networks Next-Generation Firewall, is the market leader in its category. They also offers a range of other security products, including its WildFire malware detection service and Traps advanced endpoint protection solution.
Third, the company has a proven business model. Palo Alto Networks has a subscription-based business model that generates high levels of recurring revenue. This recurring revenue stream provides the company with a predictable and growing source of cash flow, which gives it the financial flexibility to invest in new product development and sales and marketing initiatives.
PANW is a strong buy due to its recently declared 3-for-1 stock split (trading on a post-split price on September 14), expansion of its stock repurchase program by over $900 million, and spectacular forecasts for the next quarter and fiscal 2023.