PANW Plunges 14% in 3 Months: Should You Hold or Fold the Stock?

Core Viewpoint - Palo Alto Networks (PANW) shares have underperformed in the market, raising concerns about its slowing sales growth and future revenue projections [2][5][7]. Financial Performance - PANW shares have declined by 13.6% over the past three months, compared to a 12% decline in the Zacks Security industry [2]. - The company's revenue growth rate has slowed to the mid-teens percentage range, down from mid-20s in fiscal 2023 [5][6]. - For fiscal 2026, PANW forecasts revenue growth of 14-15%, with first-quarter fiscal 2026 revenues growing 16% year over year [6][8]. Key Metrics - The Zacks Consensus Estimate for PANW's revenues is projected at $2.58 billion for the current quarter and $10.52 billion for the current year, reflecting a year-over-year growth estimate of 14.34% [8]. - NGS ARR growth has decelerated for six consecutive quarters, with fiscal 2026 expected to show 26-27% growth, down from 32% in fiscal 2025 [6][8]. Market Position and Opportunities - The global cybersecurity market is projected to grow from $218.98 billion in 2025 to $699.39 billion by 2034, indicating a significant addressable market for PANW [12]. - PANW's Cortex XSIAM platform has gained 470 customers, with an average customer spending over $1 million in ARR, highlighting its appeal to large enterprises [14][15]. - The company has signed a record $85 million deal with a U.S. telecom firm, indicating strong demand for its solutions [15]. Strategic Developments - PANW is expanding its partnership with Google Cloud, integrating its Prisma AIRS with Google services to enhance security for AI models and data [16]. - The company has also integrated Prisma AIRS with other AI agent platforms, enhancing its product offerings [17]. Valuation - PANW is currently trading at a lower price-to-sales (P/S) ratio of 11.24X compared to the industry average of 12.22X, providing valuation support despite growth concerns [18][22]. Conclusion - Despite slowing revenue growth, PANW remains a leader in cybersecurity with a strong long-term growth trajectory and continued innovation in AI [22][23].