What Happened?
Shares of cybersecurity provider Palo Alto Networks (NASDAQ: PANW) jumped 3.3% in the pre-market session after it received rating upgrades from two prominent Wall Street analysts, Piper Sandler and Deutsche Bank. Both Piper Sandler and Deutsche Bank upgraded Palo Alto Networks to a "Buy" rating from "Hold." Piper Sandler raised its price target to $225, with the firm expecting the company's push to sell integrated security products to drive a rebound in bookings and accelerate growth into late 2025. Similarly, Deutsche Bank increased its price forecast for the stock to $220. This wave of optimism from Wall Street comes just days before the cybersecurity company is scheduled to report its fourth-quarter earnings on August 18.
After the initial pop the shares cooled down to $177.50, up 1.2% from previous close.
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What Is The Market Telling Us
Palo Alto Networks’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was about 22 hours ago when the stock gained 4.1% on the news that cooler-than-expected inflation data ignited investor optimism for a potential Federal Reserve interest rate cut. The July Consumer Price Index (CPI) report, an important measure of inflation, came in cooler than expected, showing prices holding steady at an annual rate of 2.7%. This data has led to speculation that the Federal Reserve might lower interest rates. For growth-focused sectors like SaaS, lower interest rates are particularly beneficial as they increase the present value of companies' future earnings, making their stocks more appealing.
Palo Alto Networks is down 1.8% since the beginning of the year, and at $177.50 per share, it is trading 14.8% below its 52-week high of $208.28 from February 2025. Investors who bought $1,000 worth of Palo Alto Networks’s shares 5 years ago would now be looking at an investment worth $4,072.
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