On Friday, Scotiabank (TSX:BNS) analysts adjusted the price target for Palo Alto Networks (NASDAQ:PANW) shares, bringing it down to $200 from a previous target of $400.
Despite the significant reduction, Scotiabank retained a Sector Outperform rating on the cybersecurity company's stock.
The adjustment comes in the wake of Palo Alto Networks' announcement in November 2024 regarding a two-for-one forward stock split. The split was effected for shareholders recorded by the close of trading on December 12, 2024, with the additional shares distributed after the close of trading on the following day. The stock began trading on a split-adjusted basis after December 16, 2024.
Scotiabank's report provided updated financial metrics post-split, projecting Free Cash Flow Per Share (FCFPS) for fiscal years 2025 and 2026 at $4.86 and $5.49, respectively. Earnings Per Share (EPS) estimates for the same periods are set at $3.95 and $3.57.
The analyst also noted that the valuation methodology remains unchanged at approximately 39 times the calendar year 2026 estimated EBITDA. The recalibration of the target price to $200 reflects the impact of the stock split, effectively maintaining the valuation while accounting for the increased number of shares outstanding.
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