PANW
Palo Alto Networks, Inc.
$260.58
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 62.1% above fair value
You pay
$260.58
Bear
$102.81
Fair
$160.73
Bull
$226.03
Bear
$102.81
-60.5%
9% stage 1 growth, 11% discount
Fair
$160.73
-38.3%
15% stage 1 growth, 11% discount
Bull
$226.03
-13.3%
20% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (15% base case)
Terminal Value % of EV
43%
Implied Market Multiple
70.1x
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $230.58 from 86 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $160.73 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 $230.58 (from 86 analysts). Our estimate is 47% 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