Palo Alto Networks Could Be Worth Over $433 - 21% More - as Analysts Hike Their Revenue Forecasts

Palo Alto Networks (PANW) is set to release its fiscal Q4 earnings on Sept. 1. Since my last Barchart article, when I set a $402.88 price target, analysts have raised their revenue forecasts. The new PANW PT is $433 , 21% higher. This article will show why.

PANW closed at $357.87 on Friday, Aug. 21. That's down from a peak of $394.42, close to my prior PT, on Aug. 13. It could move significantly higher over the next year.

Soros Fund Management Opened a New Position in Nebius During Q2. What This Means for NBIS Stock.

Nvidia Earnings, Jackson Hole and Other Key Things to Watch this Week

Ahead of Nvidia Earnings, Here's What Barchart Data Says Comes Next for NVDA Stock

Tired of missing midday reversals? The FREE Barchart Brief newsletter keeps you in the know. Sign up now!

This depends on the upcoming Q4 trailing 12-month (TTM) adjusted free cash flow (FCF) margin. If it comes in strong, the price target could even be higher.

Palo Alto Networks is one of the very few companies that tracks and projects its TTM FCF margins. That is because most of its annual FCF comes in during one quarter, Q1. Each quarter it tracks its TTM FCF margin.

For example, below is a chart from page 15 of its last quarterly report deck (Q3 ending April 30). It shows a 38.5% TTM FCF margin, but it has exceeded 39% in one quarter.

Management said in the outlook section of its Q3 earnings release that it expects to make a 37.5% TTM adj. FCF margin in Q4 (i.e., for the full fiscal year ending July 31, 2026).

So, using analysts' projections of $11.42 billion for the year, that means adj. FCF could reach $4.2825 billion. That would be higher than the $4.08 billion in Q3 TTM adj. FCF, even though the margin was lower.

So, this is already "baked" into PANW's market value. Any higher margin or result greater than $4.28 billion could push PANW stock higher.

For example, the CFO, Dipak Golechha, said in the third paragraph of the Q3 earnings release that Palo Alto expects to reach a 40% margin eventually:

"We are executing ahead of our M&A integration plans and improving profitability across our businesses, which keeps us firmly on track to achieve 40% adjusted free cash flow margin in FY28…"

So, for forecasting purposes, let's assume next year, FY 2027 ending July 2027, the company will have at least a 38% FCF margin. That's higher than management's forecast for FY 2026 (37.5%), but lower than the Q3 TTM adj FCF margin of 38.5%.

Moreover, analysts have hiked their FY 2027 forecasts. Since my Barchart article on June 30, " Dear Palo Alto Networks Shareholders - Next Stop $400 Per Share ," it has risen from $13.78 billion to $13.84 billion today (Seeking Alpha analyst survey).