Palo Alto Networks' Deals Are Dragging on Its Profit Outlook. The Stock Is Falling

Key Takeaways

• Palo Alto Networks shares slumped Wednesday after the cybersecurity software firm lowered its profit forecast for the fiscal year.
• The company’s recent acquisitions dragged on its profit outlook.

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Palo Alto Networks’ string of recent deals is hurting its profit outlook, weighing on its stock.

Shares of Palo Alto Networks (PANW) were down 6% to about $153 in recent trading after the cybersecurity provider’s full-year outlook disappointed. It was the worst-performing stock in the S&P 500 and Dow on a day when broader markets gained.

Palo Alto Networks said late Tuesday that it now expects adjusted earnings per share of $3.65 to $3.70 for the full fiscal year, down from its previous range of $3.80 to $3.90. The company is grappling with higher integration costs tied to its recent acquisitions, including its $25 billion purchase of CyberArk.

Why This Matters to Investors

Wednesday’s move lower suggests that Palo Alto Networks’ lower profit outlook dealt a blow to confidence in the company’s stock, extending its recent slump amid a broad rout for software stocks.

Morgan Stanley analysts trimmed their price target for Palo Alto Networks stock to $223 from $245 following the results. However, they maintained an “overweight” rating and called its post-earnings drop “overdone,” citing the company’s “compelling argument for AI as a tailwind.”

Meanwhile, analysts at Wedbush stood by their “outperform rating” and $225 target Wednesday, calling Palo Alto Networks “one of our favorite cyber names to own in 2026.” Though ratings are still in flux, most analysts tracked by Visible Alpha have stood by their bullish ratings for the stock.

Palo Alto Networks reported adjusted earnings per shares of $1.03 on a 15% year-over-year jump in revenue to $2.59 billion for its fiscal second quarter. Both figures came in above analysts’ estimates compiled by Visible Alpha.

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With Wednesday’s slide, Palo Alto Networks shares have lost about 16% of their value since the start of the year.

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