Palo Alto Networks, Inc

Palo Alto Networks, Inc. (NASDAQ: PANW) delivers AI-powered security solutions spanning network, cloud, security operations, and threat intelligence. Its business is structured around four core areas: Network Security, Cloud Security, Security Operations, and Unit 42 advisory services.

As per previous Kalkine’s The Shariah Compliance Report published on ‘PANW’ on August 15, 2025, Kalkine provided an ‘Buy’ stance on the stock at USD 173.55 based on fundamental analysis and the stock price has now moved up by ~ 16.27% since then and has breached resistance level 2.

Noted below are the details of support and resistance levels provided in our previous report: 

Rationale – Sell at USD 201.79

• Decline in GAAP Profitability: Despite delivering strong revenue growth, Palo Alto Networks reported a decline in GAAP net income for the fiscal fourth quarter 2025. Net income fell to USD 253.8 million, or USD 0.36 per diluted share, compared with USD 357.7 million, or USD 0.51 per diluted share, in the prior year. This decline signals that the company is struggling with higher costs or other pressures that are eroding bottom-line profitability on a GAAP basis, even as revenue continues to grow at a double-digit pace.
• Dependence on Non-GAAP Adjustments: The company’s earnings strength is largely reflected in its non-GAAP results, which exclude share-based compensation, acquisition-related costs, and other one-time charges. While non-GAAP net income grew significantly, the widening gap between GAAP and non-GAAP results raises concerns about the sustainability of reported profitability. Heavy reliance on adjustments could suggest persistent structural costs, particularly around stock-based compensation and acquisitions, that weigh on shareholder value over time.
• Slowing Revenue Growth Outlook: Although Palo Alto Networks achieved a milestone by crossing a USD 10 billion run-rate, its forward guidance reflects moderating growth rates. Fiscal year 2026 revenue is projected to grow by 14% year over year, which marks a slowdown compared to the 15% growth in FY2025 and 16% in Q4 FY2025. This deceleration could indicate intensifying competition in the cybersecurity market or challenges in sustaining the current pace of expansion across its portfolio.
• Pressure on Remaining Performance Obligation Growth: Remaining performance obligation (RPO) growth also shows signs of slowing momentum. While RPO expanded by 24% year over year in Q4 FY2025, the company expects only 17% to 18% growth in fiscal 2026. This moderation suggests that future contracted revenues, which are an important indicator of long-term demand visibility, may not be accelerating at the same pace as before. Slower RPO expansion could raise questions about the durability of Palo Alto Networks’ growth trajectory in the medium term.

Valuation (Using Price/Earnings Value Multiple)

Share Price Chart

Conclusion

Palo Alto Networks’ Q4 FY2025 results highlight some concerning trends despite strong revenue growth. GAAP profitability declined meaningfully, reflecting rising costs and ongoing dependence on non-GAAP adjustments to present stronger earnings. Moreover, forward guidance points to a slowdown in both revenue and remaining performance obligation growth, signaling potential challenges in sustaining momentum amid intensifying competition in the cybersecurity market.

Based on the notional gains, valuation downside and price action stance, a "Sell" recommendation on Palo Alto Networks, Inc. (NASDAQ: PANW) has been given at the current market price of USD 201.79 as on 15 September 2025 at 6:45 am PDT.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 10 September 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock market can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided have been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.