TLDR
- Palo Alto Networks (PANW) stock jumped 5-6% after beating Q4 earnings expectations across all major metrics
- Revenue rose 16% year-over-year to $2.54 billion, with adjusted EPS beating forecasts by 7.3%
- Company’s backlog grew 24% to $15.8 billion, showing strong demand for security services
- Strong results helped ease investor concerns about the costly CyberArk acquisition announced in July
- Analysts maintain bullish outlook with average price target of $216, suggesting 22.6% upside potential
Palo Alto Networks delivered exactly what investors needed to see. The cybersecurity company’s fourth-quarter results beat Wall Street expectations across every major metric, sending shares up 5-6% in after-hours trading.
The strong performance comes at a crucial time for Palo Alto. Just three weeks ago, the stock was nursing a 10% decline after announcing its plan to acquire CyberArk Software for a hefty premium that spooked shareholders.
Revenue for the quarter climbed 16% year-over-year to $2.54 billion. That number topped analyst forecasts by 1.4%, a clean beat that helped calm nerves about the company’s growth trajectory.
Palo Alto Networks, $PANW, Q4-25. Results:
📊 Adj. EPS: $0.95 🟢
💰 Revenue: $2.54B 🟢
📈 Net Income: $253.8M
🔎 Revenue grew 16% YoY as the company surpassed a $10B annual run rate and achieved record Next-Gen Security ARR. pic.twitter.com/Vig5Xbtcc0— EarningsTime (@Earnings_Time) August 18, 2025
Adjusted earnings per share also exceeded expectations. The company delivered results 7.3% above consensus estimates, showing strong operational execution even as it prepares for a major acquisition.
The company’s backlog tells an even more compelling story. Total remaining performance obligations reached $15.8 billion, up 24% from the prior year and ahead of Wall Street estimates by 3.6%.
Next-Generation Security annual recurring revenue surged 32% year-over-year. This metric came in ahead of both company guidance and analyst expectations, highlighting strong demand for Palo Alto’s newer security offerings.
Deal Concerns Weigh on Stock
The CyberArk acquisition announcement on July 30 initially rattled investors. Under the deal terms, CyberArk shareholders will receive $45 cash plus 2.2005 Palo Alto shares for each of their holdings.
The transaction represents a 26% premium to CyberArk’s pre-announcement share price. More concerning for Palo Alto investors, the deal would result in substantial share dilution of over 13%.
Shares dropped 10% in the two trading days following the merger announcement. The stock didn’t begin recovering until last week, as investors waited for quarterly results to provide clarity on the company’s underlying performance.
The acquisition would expand Palo Alto’s reach into identity security. CyberArk is a leader in this space, which represents a natural extension of Palo Alto’s existing security portfolio.
CEO Nikesh Arora defended the strategic rationale on the earnings call. He emphasized that enterprises increasingly want integrated security solutions rather than point products from multiple vendors.
Arora highlighted the company’s “Platformization” strategy. This approach bundles together firewalls, cloud security, and identity tools into a unified offering.
The CEO also pointed to the threat landscape as justification for the deal. He noted that agent-driven AI attacks are compressing the time window for security responses to just 25 minutes.
Analyst Support Remains Strong
Wall Street analysts backed the company following the strong quarter. Shrenik Kothari of Robert W. Baird maintained his Buy rating with a $230 price target.
Kothari praised the company’s robust financial performance and growth prospects. He specifically called out the strong backlog growth and Next-Generation Security revenue performance.
Truist Financial’s Junaid Siddiqui kept his Buy rating with a $205 target. Cantor Fitzgerald’s Jonathan Ruykhaver also maintained his Buy rating on the stock.
UBS took a more cautious stance, maintaining a Hold rating. However, the firm didn’t provide specific reasons for its more conservative outlook.
The company raised guidance for both the next quarter and full fiscal year 2026. Management is targeting $10 billion in revenue for fiscal 2026, which would make Palo Alto the first pure-play security company to cross that threshold.
TipRanks shows 30 Buy ratings, seven Hold ratings, and one Sell rating among the 38 analysts covering the stock. The average price target sits at $216.03, implying 22.6% upside from recent levels around $176.
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