Palo Alto Networks (PANW) is heading into the end of 2026 with a mix of strengths and challenges, UBS Securities said Tuesday in a report.
UBS cited steady customer interest following the company's April Mythos announcement, which introduced new AI-driven security products, though partner feedback hasn't meaningfully strengthened since then.
Partners indicated that July was solid with healthy demand for Palo Alto's core security products and continued interest in consolidating multiple security tools onto its platform, UBS said. Firewall sales, the company's original business, remained healthy, the report said.
SASE and Prisma Cloud were cited as key growth drivers, UBS said. SASE helps employees securely connect to company systems from anywhere, while Prisma Cloud protects applications and data stored in the cloud. Interest is also building in Prisma AIRS, Palo Alto's new AI-powered security tool, though most customers are still evaluating it, the report said.
UBS said Palo Alto's new reporting structure should give investors a clearer view of three businesses: Network Security, which includes firewalls; Cortex, which provides software for detecting and responding to threats; and Identity, rebranded as Idira, which manages access to sensitive systems.
UBS forecasts Network Security revenue growth of 12% in 2026 and 11% in 2027, Cortex growth of about 32% each year, and Identity growth of 23% annually.
UBS raised its price target on Palo Alto stock to $390 from $300 and maintained its neutral rating.
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