PANW
Palo Alto Networks, Inc.
$371.59
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 260.6% above fair value
You pay
$371.59
Bear
$65.91
Fair
$103.04
Bull
$144.90
Bear
$65.91
-82.3%
9% stage 1 growth, 11% discount
Fair
$103.04
-72.3%
15% stage 1 growth, 11% discount
Bull
$144.90
-61.0%
20% stage 1 growth, 11% discount
Adjust Assumptions
15.5%
11.0%
3.0%
Key Value Driver
FCF growth rate (15% base case)
Terminal Value % of EV
43%
Implied Market Multiple
120.1x
Market is pricing in (growth)
33.0%
vs 15.5% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (89 analysts)
$376.94
Divergence from AlphaVal
73%
Summary
Using a two-stage FCF DCF with 15% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $103.04 per share.
Warnings
Stock-based employee pay equals 114% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $376.94 (from 89 analysts). Our estimate is 73% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions