By Peet Serfontein & Khumbulani Kunene
We initiate a long position with a target price of $228.00 and a stop-loss of $152.00.
Palo Alto Networks is a leading American cybersecurity company that helps organisations prevent cyber threats across networks, endpoints and cloud environments. Its product offering includes firewalls that identify and control applications, scan content to stop threats, prevents data breaches and provides content visibility.
Headquartered in California, the company leverages artificial intelligence and machine learning to deliver proactive threat intelligence and protection. The company's offering integrates diverse security solutions into a unified, scalable platform, streamlining management, and providing operational efficiencies with comprehensive protection. The company services thousands of clients globally, across all sectors.
Technically, a trough in the price presents a promising investment opportunity for the stock (see the insert on the main chart). In the Elliott Wave Theory, wave one highlights the early foundation of a new bullish trend, often acting as a crucial support level. A price holding above this trough suggests that the corrective Wave two may have concluded, setting stage for the emergence of Wave three. This wave is typically driven by growing investor confidence, stronger fundamentals, and increased market participation.
A price that remains above key support also reinforces a bullish case for the stock (see the black trendline on the main chart). Such action highlights that buyers are defending this area, preventing further downside. This stability can also act a foundation for higher price moves.
Investors can also gain exposure to Palo Alto through FNB's JSE listed ETN's, PAETNC (with rand exposure) and PAETNQ (without rand exposure).
| Share Information | |
|---|---|
| Share Code | PANW, PAETNC, PAETNQ |
| Industry | Software & Services |
| Market Capital (USD) | 114.9 billion |
| One Year Total Return | 26.21% |
| Return Year-to-Date | -4.62% |
| Current Price (USD) | 173.55 |
| 52 Week High (USD) | 208.39 |
| 52 Week Low (USD) | 135.18 |
| Financial Year End | July |
| The stock is trading below its 200-day simple moving average (SMA). | |
| Consensus Expectations (Bloomberg) | ||||
|---|---|---|---|---|
| FY24 | FY25E | FY26E | FY27E | |
| Headline Earnings per Share (USD) | 2.84 | 3.23 | 3.75 | 4.27 |
| Growth (%) | 13.83 | 16.05 | 13.97 | |
| Dividend Per Share (USD) | 0 | 0 | 0 | 0 |
| Growth (%) | - | - | - | |
| Forward PE (times) | 48.29 | 42.17 | 40.66 | |
| Forward Dividend Yield (%) | 0 | 0 | 0 | |
| Solid double-digit earnings growth is expected in the medium term. | ||||
Buy/Sell Rationale:
Technical Analysis:
Fundamental view
| Share Name and Position | STE US - Buy (Continue to hold) |
MKC US - Stop Loss (Exit the trade) |
HAS US - Stop Loss (Exit the trade) |
|---|---|---|---|
| Entry | 217.20 | 82.31 | 61.04 |
| Current | 221.04 | 76.46 | 54.99 |
| Movement | +1.8% | -7.1% | -9.9% |
|
An Elliott wave price that is forming a trough remains of interest. Re-testing its 200-day simple moving average. Muted upside price momentum is supportive.
Our profit target remains at $239.00 with a trailing stop-loss at $212.00. Exit the trade by 18 April 2025. |
The trade reached our stop-loss level, and we closed the trade on. We will reconsider exposure to the stock when market dynamics improve. | The trade reached our stop-loss level, and we closed the trade. We will reconsider exposure to the stock when market dynamics improve. |
| Share Name and Position | RJF US - Stop Loss (Exit the trade) |
MU US - Stop Loss (Exit the trade) |
MPWR US - Time exit (Close the position) |
|---|---|---|---|
| Entry | 143.74 | 89.05 | 617.57 |
| Current | 130.28 | 74.34 | 498.68 |
| Movement | -9.4% | -16.5% | -19.3% |
| The trade reached our stop-loss level, and we closed the trade. We will reconsider exposure to the stock when market dynamics improve. | The trade reached our stop-loss level, and we closed the trade. We will reconsider exposure to the stock when market dynamics improve. | The trade reached its time exit date and we opted to close the position. |
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