Why Palo Alto Networks Inc. Will Pop to $90

Does this analyst make a good case? Or is it just more noise from Wall Street?

Mar 25, 2014 at 5:25PM

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Palo Alto Networks Inc. (NYSE:PANW) had a roller-coaster of a day on Tuesday after FBR Capital upgraded the network security technologist from "market perform" to "outperform."

So what: Along with the upgrade, analyst Daniel Ives boosted his price target to $90 (from $80), representing about 25% worth of upside to yesterday's close. So while contrarians might be turned off by the stock's strength over the past several months, Ives' call might reflect a strengthening sense on Wall Street that Palo Alto has plenty of room to fly.

Now what: FBR boosted its 2014 revenue outlook for Palo Alto from $570.6 million to $574.2 million and its 2015 view from $750.0 million to $762.3 million. "Our checks indicate faster-than-expected adoption of Palo Alto's appliances/services and a more productive sales force, coupled with ongoing secular strength," said Ives. "To this point, we believe strong cybersecurity spending is leading to the company's good progress in the field for both its appliances and SaaS business (e.g., Wildfire) as it appears a solid product cycle and subscription offering are giving Palo Alto's tailwinds that we believe position it for robust top-line/billings growth (we estimate 45% revenue growth for FY14 and 33% for FY15 excluding the Cyvera acquisition) over the next 12 to 18 months." With the stock already up about 60% over the past six months and trading at a steep-ish price-to-sales of 11, however, much of those prospects might already be baked into the valuation. 

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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