Palo Alto Networks, Inc. (PANW) DCF Valuation
TGM's two-stage DCF values Palo Alto Networks, Inc. (PANW) between $100.86 and $170.98 depending on assumptions, with a base case of $131.91. Growth is taken from the company's own record (blend of 5-year revenue and FCF growth (capped at 18%)), fading to 2.5% long-run; the discount rate (8.8%) reflects its beta.
What would today's price require?
$279.53 is justified only if free cash flow grows about +38.2% a year (fading to 2.5% long-run) at a 8.8% required return — faster than the company has actually grown.
| Scenario | FCF growth (fading to 2.5%) | Discount | Value / share |
|---|---|---|---|
| Conservative | 15.0%/yr | 9.8% | $100.86 |
| Base case | 18.0%/yr | 8.8% | $131.91 |
| Optimistic | 20.0%/yr | 7.8% | $170.98 |
| Analyst DCF (FMP) | independent reference — different model | $118.72 | |
Current Price
$279.53
Market-Implied Growth
+38.2%/yr
vs +25.3% 5Y actual
Model Scenario Range
$100.86 – $170.98
model output — not a price target
PANW DCF Fair Value Calculator
Edit the assumptions to see how they change the estimated fair value. Opens seeded with TGM's data-driven base case for PANW (growth from its own 5-year record, discount from its beta), so the sandbox starts where the scenarios above leave off. Illustrative model — not investment advice.
Base inputs: FCF $2.9B · 0.68B shares · net cash $2.3B
Estimated Fair Value
$224.92
-19.5% vs $279.53
Sensitivity — fair value by discount rate × terminal growth
How the estimated fair value shifts with the discount rate (WACC) and terminal growth, holding your 18.0%/yr FCF growth and 10-year horizon fixed. Green = above today's $279.53; red = below. Your current case is outlined.
| WACC ↓ / Terminal → | 1.50% | 2.00% | 2.50% | 3.00% | 3.50% |
|---|---|---|---|---|---|
| 6.8% | $297 | $321 | $351 | $388 | $437 |
| 7.8% | $242 | $257 | $276 | $298 | $325 |
| 8.8% | $203 | $213 | $225 | $239 | $256 |
| 9.8% | $173 | $180 | $189 | $198 | $209 |
| 10.8% | $150 | $155 | $161 | $168 | $176 |
About Palo Alto Networks, Inc.
Palo Alto Networks, Inc. is a global leader in providing advanced cybersecurity solutions. The company's core product line includes both hardware and software-based firewalls. It also offers Panorama, a sophisticated security management platform designed for centralized control of these firewall deployments, whether they are physical appliances, virtual instances, or situated in public or private cloud environments. Additionally, the firm provides virtual system upgrades to enhance the capacity of its physical firewall units. Complementing its core products, Palo Alto Networks delivers an extensive range of subscription services. These encompass robust threat prevention, protection against malware and advanced persistent threats, URL filtering, and security for both laptop and mobile devices. Further specialized subscriptions include DNS security, Internet of Things (IoT) security, SaaS security (via API and inline methods), threat intelligence, and data loss prevention. Beyond its product and subscription offerings, the company extends various expert services, such as cloud security, secure access solutions, security analytics and automation tools, and specialized cybersecurity consulting, often integrated with threat intelligence. Its professional services cover critical areas like architectural design and planning, system implementation, configuration, and seamless firewall migration. Educational resources, including certifications and both online and in-classroom training, are also available, alongside comprehensive support services. Palo Alto Networks distributes its security solutions both directly and through an extensive network of channel partners. Its diverse clientele primarily comprises medium to large-scale enterprises, service providers, and governmental organizations across a wide array of industries. These sectors include education, energy, financial services, healthcare, internet and media, manufacturing, the broader public sector, and telecommunications. Established in 2005, Palo Alto Networks maintains its corporate headquarters in Santa Clara, California.
- Sector
- Technology
- Industry
- Software - Infrastructure
- CEO
- Nikesh Arora