What happened

Shares of Palo Alto Networks (PANW 0.11%) rocketed 18.7% in February, according to data provided by S&P Global Market Intelligence. Driving the cybersecurity stock's rally was its strong fiscal second-quarter results. 

So what

In the second quarter, the global cybersecurity leader's revenue soared 26% to $1.7 billion. Operating income and adjusted free cash flow rose 55% to $377 million and $685 million, respectively.

The company also reported $1.05 per share of adjusted earnings, which was 81% above the year-ago level. Earnings were also $0.28 per share ahead of Palo Alto's guidance and $0.27 per share above the analysts' consensus estimate.

The company's investments in building an integrated solution give it a competitive advantage in the current macroeconomic environment. It's allowing Palo Alto Networks to help customers consolidate their security architectures to improve security and save money in the long run. 

Palo Alto's focus on driving profitable growth is also delivering results. Thanks to increased efficiency, the company is raising its targets for cash-flow margin and operating profitability for the year. It now sees its operating margin between 21.5% and 22% (up from 19.5% a prior range of 20%). It's also raising its adjusted free-cash-flow margin from a range of 34.5% to 35.5% to a range of 36.5% to 37.5%.

Analysts loved the results and the increased profitability and cash-flow guidance. After its fiscal second-quarter results, several boosted their price target on Palo Alto Networks. Morgan Stanley analyst Hamza Fodderwala has increased his firm's price target from $240 to $255 per share -- one of the highest among Wall Street analysts, implying more than 35% upside from the recent share price.

The analyst noted that the company's results "checked all the boxes" and sees "no reason why the stock shouldn't re-rate higher." He believes Palo Alto Networks is "firmly on the path to becoming the first $100 billion market-cap company in cybersecurity." That implies a $300 share price in two years. 

Wedbush Securities raised its price target from $200 to $210 per share while keeping its outperform rating. Wedbush analyst Dan Ives wrote that the company delivered solid results across the board, which "should send the bears into hibernation mode as the Street digests this stellar print." Ives also wrote that the cloud transformation at Palo Alto is well underway. 

Now what

Palo Alto Networks' investments to build an integrated cybersecurity platform are paying dividends. The company is grabbing market share as customers increasingly consolidate their various security products by joining Palo Alto's platform. That positions the company to continue growing earnings and cash flow at rapid rates, which should increase shareholder value in the future.