Palo Alto Networks (PANW), a prominent IT security firm, is well-positioned to capitalize on a recent significant hacking incident that has drawn attention to the need for enhanced cybersecurity. At a forward price-earnings ratio of 54, PANW’s stock appears relatively undervalued compared to other cybersecurity leaders like CyberArk (CYBR) at 98, CrowdStrike (CRWD) at 131, and Zscaler (ZS) at 76.3, making it an attractive option for growth investors seeking a reliable technology stock.
The hacking incident affected various organizations, including the National Nuclear Security Administration, which reported no loss of classified information but highlighted vulnerabilities in Microsoft’s SharePoint software. This hack is expected to compel both the government and private sector to bolster their IT security. Given Palo Alto’s substantial presence in these markets, the company is likely to benefit significantly from the increased security measures that follow.
Moreover, the company is strategically pursuing acquisitions that could further enhance its capabilities amidst the booming demand for AI-driven security solutions. Reports indicate that Palo Alto is in discussions to acquire CyberArk for over $20 billion, a move that could provide substantial synergies given CyberArk’s notable client roster, which includes major corporations like Mastercard and Exxon Mobil. This acquisition would allow Palo Alto to sell its offerings to CyberArk’s customers and vice versa, presenting numerous cross-selling opportunities.
Recent venture into securing artificial intelligence systems was bolstered by Palo Alto’s acquisition of Protect AI, a leader in AI security technology. This acquisition complements its strategy by allowing businesses to secure AI applications comprehensively.
Additionally, ongoing talks about acquiring Israel-based SentinelOne suggest that Palo Alto is keen on expanding its reach within federal and commercial sectors, which could provide a further advantage following the recent breach incident.
Overall, the combination of significant recent events, acquisitions, and a favorable valuation position Palo Alto Networks as a compelling choice for investors focused on growth in the cybersecurity space, particularly as organizations seek to enhance their defenses against evolving cyber threats.