November 8, 2018

PANW – Market expectations are for declining Uniform ROA, and management has concerns about cyber-criminals, margins, and their business model


  • Palo Alto Networks, Inc. (PANW:USA)currently trades above corporate averages relative to UAFRS-based (Uniform) Earnings, with a 30.0x Uniform P/E. However, even at these levels, the market has bearish expectations for the firm, and management has concerns about their ability to counter cyber-criminals, Application Framework and Logging Service margins, and their ability to succeed as a product company in the industry
  • Specifically, management may have concerns about their ability to match cyber-criminal’s use of technology and data to prevent cyber-attacks, and to win in the cyber-security space as a product company. They may also have concerns about the impact that Application Framework and Logging Service might have on their gross margins, and about the strength of their sales coverage model. Finally, they may be exaggerating the loyalty of their customers across their product lines, and may lack confidence in their ability to meet their goal of retaining a common data set throughout their products while creating new offerings
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