PANW
Palo Alto Networks, Inc.
$375.04
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Overvalued
Trading 249.7% above fair value
You pay
$375.04
Bear
$58.86
Fair
$107.24
Bull
$161.06
Bear
$58.86
-84.3%
12% rev growth, 22% terminal margin
Fair
$107.24
-71.4%
20% rev growth, 29% terminal margin
Bull
$161.06
-57.1%
26% rev growth, 34% terminal margin
Adjust Assumptions
20.0%
29.0%
12.0%
Key Value Driver
Revenue growth (20%) × margin expansion to 29%
Terminal Value % of EV
52%
Implied Market Multiple
26.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (89 analysts)
$400.05
Divergence from AlphaVal
73%
Summary
Projecting 20% revenue growth with FCF margins expanding from 36% to 29% over 10 years, discounted at 12%, the base-case value is $107.24 per share.
Warnings
Wall Street's average price target is $400.05 (from 89 analysts). Our estimate is 73% below the consensus -- consider that gap carefully.
Key Risks
- Current FCF misleads — the model values future margins, not today's cash
- SBC dilution is the hidden tax: 2-4% annual share growth compounds fast
- Revenue deceleration is inevitable — the question is when and how steep