Wells Fargo & Company: Palo Alto Networks (PANW.US) is expected to benefit from the consolidation of the cyber security industry, and is first given a "buy" rating.

Wells Fargo & Company issued its first ratings for the cybersecurity industry on Tuesday, giving Palo Alto Networks (PANW.US) a "Buy" rating and a target price of $200. The firm believes that the company may benefit from industry consolidation. Analyst Michael Turrin wrote in a report to clients, "We believe the recent mispricing in the stock market presents an opportunity to capture almost all major long-term trends in the cybersecurity sector. While mergers and acquisitions may bring short-term risks, we ultimately see occupying a 10% share in the market exceeding $300 billion leading to long-term returns." Turrin further explained that Palo Alto Networks has a large enterprise customer base, distribution advantages, "unmatched platform coverage," and the ability to invest through its own development and acquisitions, all of which make it stand out in competition. He cited the recent acquisition of CyberArk as an example of how Palo Alto Networks benefits from deals. Turrin added, "CyberArk fills the only gap in Palo Alto Networks' security product portfolio (identity authentication) and brings immediate value, while also driving cross-selling. Its long-term value proposition is more attractive reshaping identity authentication (addressing issues such as vendor fragmentation, the largest attack surface, artificial intelligence agents), making it a more tightly integrated part of the security architecture. We acknowledge the execution risk is significant, but Palo Alto Networks' past success in unconventional aggressive moves is encouraging."