KeyBanc Upgrades Palo Alto Networks to Overweight on AI Security Demand

KeyBanc Capital Markets upgraded Palo Alto Networks (PANW) to overweight from sector weight on Friday, setting a $380 price target, as analyst Eric Heath cited accelerating security budgets through 2027 and the company's AI security products.

Heath said Palo Alto Networks outperforms many of its cybersecurity peers and is a leading beneficiary of the trend toward consolidation in security, with strong offerings in areas that secure AI and defend against AI-driven threats. He said the 20% pullback in shares over the past month, together with positive first-quarter checks, made for an attractive entry point.

The stock has fallen about 20% over the past month, according to KeyBanc, while delivering a 58% return over the past year and rising 75% year to date. The $380 target implies roughly 18% upside from Thursday's close of $322.66. Shares gained more than 3.5% in premarket trading Friday.

Palo Alto Networks is scheduled to report fiscal first-quarter 2027 results on November 18. Stifel reiterated a buy rating with a $415 target after channel checks with five Tier-1 cybersecurity partners, three of which reported results above expectations. Evercore ISI maintained an outperform rating, also with a $415 target, citing a constructive outlook and healthy pipeline. Deutsche Bank reiterated a buy rating and expects revenue to modestly exceed the guidance midpoint. AmerX initiated coverage with a hold rating, noting the company's leadership in revenue and customer base among cybersecurity firms.

Options data suggests a potential 8.7% move in the stock following the earnings announcement. KeyBanc also noted that 34 analysts have recently revised their earnings estimates upward.

The delayed price for PANW was $322.66, down 3.53%, in trading Friday.

The November 18 earnings report is the next dated event for the stock, with investors focused on revenue versus guidance and on management's commentary about AI security demand.