Palo Alto Networks stock has 26% upside, according to one Wall Street analyst.

Palo Alto Networks (PANW -1.22%) Stocks are a mess. Two months ago, the cybersecurity company reported strong earnings but drastically lowered its guidance, sending its shares tumbling. Palo Alto hasn’t recovered much since.

this I think I will change. on Thursday, key bank As TheFly.com reported, analyst Michael Turits lowered his price target for Palo Alto. However, Turits said the stock is still worth about $355 per share and still rates Palo Alto Networks as “overweight.”

However, I must admit that I myself am a shareholder of Palo Alto. Turitz’s optimism was quite weak.

Is Palo Alto Networks stock a buy?

Consider: KeyBanc’s exclusive Q1 2024 value-added reseller (VAR) survey found that half of enterprise IT departments that Palo Alto sells to are spending less than their budgeted amount on cybersecurity this year. Turits calls the figure “the lowest quarterly figure since the pandemic began.” Several other surveys support this view and suggest that, in fact, the situation for cybersecurity vendors like Palo Alto is getting worse, not better.

Turits’ Bottom Line: This is now a “trend” and not a good trend for Palo Alto stock. But if so, you may want to consider buying Palo Alto stock today.

That’s a great question. Because the more I look at this stock (which I own), the less I like it.

It is priced at nearly 40 times earnings and combines the collective wisdom of nearly four companies. dozen Analysts who follow Palo Alto predict that earnings will grow only 18.5% per year over the next five years. This equates to a price/growth (PEG) ratio of 2.1, while most value investors aim to buy at a PEG of less than 1.0.

Given its rich valuation, it seems very unlikely that Palo Alto stock will outperform the market over the next five years. Add in the near-term risk of Palo Alto trying to sell cybersecurity in a historically weak IT market, and now seems like a good time to invest in Palo Alto Networks stock.