Legacy tech companies experienced something of a revival on Monday, and Palo Alto Networks (PANW +9.20%) was swept up in the rally. An influential research note from a storied investment bank provided a tailwind to such titles, as did another from an analyst tracking the cybersecurity stock.
Oversold and underappreciated
A major influence on investor sentiment toward such companies was a top-down analysis published by Goldman Sachs on Friday. In that analysis, the bank's Peter Oppenheimer essentially said that the rout had left many sector mainstays oversold, leading to a mismatch between still-robust growth rates and declining valuations.
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This helped ignite the rally many techies experienced on Monday, and alone it probably would have boosted bullishness in Palo Alto stock.
Yet it was assisted by an update from Piper Sandler's Rob Owens Monday morning. In his new note, Owens reiterated his overweight (read: buy) recommendation on the stock, and his $265 per share price target.
Owens's new take followed his company's hosting of a set of investor meetings with Palo Alto's senior vice president of investor relations, Hamza Fodderwala. According to reports, after these events the analyst walked away convinced that the company was not only resistant to artificial intelligence (AI) disruption -- a key factor in the sector's rout -- but also well poised to benefit from AI integration.
NASDAQ: PANW
Key Data Points
A bullish revival
These recent analyses match my own feelings about the hammering that veteran tech stocks have taken lately. Yes, AI is a potentially disruptive technology, but any wise management team is aware of this, and the better ones are taking steps to either head off the threat or embrace the technology to their own advantage.
Owens is correct, I believe, in thinking that Palo Alto can do both. I'd strongly agree that the company's stock has been unfairly punished by Mr. Market, and I'm not surprised to see it reviving now.
