- Palo Alto Networks (PANW) stock might appear to be expensive due to the stock’s impressive growth.
- Yet, the stock actually offers strong value as ransomware threats create a need for Palo Alto’s threat protection and prevention solutions.
- Investors should give Palo Alto a chance as the share price is likely to continue on its upward trajectory.
California-headquartered Palo Alto Networks (NASDAQ:PANW) specializes in providing cybersecurity solutions. PANW stock can move significantly higher than $600 based on the company’s demonstrated revenue growth and high-tech solutions to today’s major security threats.
Two years ago, the onset of Covid-19 caused many businesses to move online. Then, the Colonial Pipeline hack highlighted the need for ongoing threat protection.
Consequently, Wall Street re-rated PANW stock and assigned it a much higher value. Fast-forward to 2022, and some prospective investors might worry that shares of Palo Alto Networks are too richly valued.
However, traders shouldn’t assume that fast-growing stocks are overpriced. As long as there’s a need for Palo Alto’s robust cybersecurity software, the shares deserve a spot in just about any tech-focused portfolio today.
|PANW||Palo Alto Networks||$592.10|
What’s Happening with PANW Stock?
When the Covid-19 pandemic struck and PANW stock was trading at $150, few people had the fortitude to load up on the shares. However, such an investment would have paid off handsomely.
Recently, the Palo Alto share price hovered near $600. That’s quite a rocket ride, but it doesn’t mean that the stock is too expensive to buy now.
Remember, sometimes higher stock prices are fully justified when a business is generating strong revenue. Based on that criterion, Palo Alto Networks passes with flying colors.
During the fiscal second quarter of 2022, Palo Alto’s revenue increased 30% year-over-year (YOY) to $1.3 billion. Not only that, but the company’s quarterly billings grew 32% YOY to $1.6 billion.
Nikesh Arora, chairman and CEO of Palo Alto Networks, provided some insight into how his company managed to achieve these fiscal figures. Arora explained:
In Q2, our company continued to benefit from strength across our three security platforms, driven by strong cybersecurity demand, organizations architecting for hybrid work and growing their hyperscale cloud footprints
Indeed, many businesses are “architecting for hybrid work” as a result of Covid-19 and modernized workplace paradigms. Thankfully, Palo Alto Networks is ready and able to keep these businesses relatively secure from threats posed by hackers, while generating notable revenue in the process.
An Ongoing Concern
While Palo Alto Networks provides top-of-the-line security solutions, threats continue to beset today’s tech-enabled businesses.
Two recent press releases from Palo Alto emphasize how prevalent and dangerous ransomware, in particular, can be nowadays. First, Palo Alto Networks released data from a survey commissioned with the Center for Digital Government (CDG). The findings highlighted the extent of ransomware’s threat to U.S. state, local and educational organizations.
Apparently, nearly 80% of state and local IT leaders believed that ransomware is an ongoing threat to their organizations, and it won’t diminish anytime soon. However, only 47% of the survey’s respondents had a ransomware incident response plan.
Plus, 79% of the respondents disagreed with the statement that the ransomware threat will subside significantly over the next 12 to 18 months. Clearly, it’s believed that ransomware will continue to pose a significant problem.
Furthermore, a report from Palo Alto Networks found that in 2021, the average ransom demand in cases worked by Palo Alto’s Unit 42 incident responders increased 144% to $2.2 million. It was also revealed that the the average ransom demand payment rose 78% to $541,010.
These are unsettling statistics — no doubt about that. However, they shine a spotlight on the need for Palo Alto’s services. So, don’t expect the company’s business to slow down anytime soon.
What You Can Do Now With PANW Stock
It’s undeniable that Palo Alto is growing its revenue quickly. Also, the company’s protection against ransomware attacks should remain in high demand for a long time.
I give PANW stock an “A” in my Portfolio Grader.
In light of these considerations, PANW stock isn’t really so expensive, after all. There’s value to be found here, so feel free to consider a long position in this cybersecurity-market innovator today.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.