Palo Alto Networks (PANW) just received another vote of confidence from Wall Street, and it came at a very active time for the stock.
The shares closed at $247.55 on May 18close to a new all-time high reached days before.
For an action that fell approximately 20% Over the past year, that swing is important for anyone who has it.
The new call gives investors something concrete to weigh before the company opens its books.
Palo Alto Networks is the largest cybersecurity company by market value.SOPA Images/Getty Images
Morgan Stanley raises its PANW price target to $253 on demand for firewall security and artificial intelligence
Morgan Stanley analysts Meta Marshall and Keith Weiss raised their price target on Palo Alto Networks at $253 from $223 on May 20, maintaining an Overweight rating, TipRanks reports.
This implies approximately 2% increase since the May 18 close, modest on its own but notable given how far the stock has already come.
The bank pointed out strong demand across firewall updates, SASE Prism, XSIAM Cortex and AI security like the drivers.
A firewall update It’s the cycle in which companies replace outdated network security hardware, and that wave of replacement is now fueling revenue.
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The firm based the new objective on a 37x higher multiple of free cash flow per share estimated for 2027, from 32xa sign that he now believes investors will pay more for every dollar Palo Alto generates.
Why Palo Alto Networks Call Timing Points Directly To June 2 Earnings
The update is not random. Palo Alto Networks will report fiscal third-quarter results on June 2 after the market closes, and analysts are positioning themselves ahead of time.
Morgan Stanley expects the company to beat consensus on remaining performance obligations, a measure of contracted future revenue that suggests Require that the income statement has not yet been recorded..
The bank sees RPO grows closer to 33% year over yearabove the midpoint of the direction’s own orientations.
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It also expects product revenue to be well above approximately 25% growth guided management a.
Two recent impressions set the table: Fortinet increased product revenue 41% in its first quarter and raised full-year guidance, according to sec.gov, while cisco beat in networking.
Such strong numbers of rivals They often indicate that the entire firewall market is healthywhich works in favor of Palo Alto.
How the launch of the Idira identity reshapes Palo Alto Networks’ growth story
The biggest structural change It lies in identity security, the work of controlling who and what can access a company’s systems.
That job is becoming more difficult. fast.
As AI agents begin to strike out on their own within enterprises, the number of things that need permission to log in and move data is exploding, and every single one of them is a target.
Palo Alto is taking steps to address that problem. As announced in a Palo Alto press release, the company introduced Idira on May 12 as your next generation identity platformcreated to manage access for humans, machines and AI agents.
The launch makes the company’s $25 billion acquisition of CyberArk an integrated part of the platform rather than a separate, standalone product.
Morgan Stanley sees three reasons why Idira is important:
da a clear answer why identity belongs within a security platform, since Agent AI makes privileged access much more common.
He opens a path of cross-selling in the Palo Alto base of more than 70,000 customers.
Allows existing CyberArk customers add machine identity and zero trust tools over time.
The thesis is that identity becomes a fourth pillar next to the network, cloudand security operations, expanding how much each customer can spend.
What still needs to go right for PANW’s target of $253 to hold
A higher goal is no guaranteeand the setup carries real risk.
The stock trades at a premium valuation, with a forward earnings multiple well above the market, so any falter in growth can hit the stock hard.
Palo Alto fell more than 5% after its last two earnings reports despite beating estimates, a reminder that a strong quarter doesn’t always send stocks higher.
Morgan Stanley also flagged potential pressure on hardware gross margins due to rising memory costs, although it noted that hardware represents a smaller proportion of Palo Alto’s revenue than its competitors.
For the bullish argument to work, a few things need to be clarified.
Here are four signs to watch out for on June 2:
RPO growth at or above the 32% to 33% range that management guided
Product revenues exceed the 25% growth barrierhelped by early firewall ordering
Next Generation Security ARR holding his approximately growth rate of 56%
The first signs that Customers are adopting Idira and CyberArk tools
If management reiterates its full-year guidance, as Morgan Stanley expects, the case for lasting demand becomes stronger.
How PANW compares to the broader market and its peers
Context helps here. Palo Alto carries a market value close to $176 billionturning it into the largest name dedicated exclusively to cybersecurity.
The stock’s roughly 78% rise from its 52-week low of $139.57 has very overmatched the S&P 500 in the same window, after reaching an all-time high in mid-May.
However, Wall Street is not unanimous on prices, although it is generally bullish.
Recent goals vary widely.
Here’s where analysts are ahead of earnings:
oppenheimer set a high standard on the street $275 after the CyberArk Impact event, Barchart reports
Truista moved to $275 from $200, and RBC Capital raised its target to $255
The consensus average sits close $223with a minimum of $114 and a maximum of $285, according to data from Stock Analysis
That differential reflects a debate about valuation, not the company’s growth.
The bottom line for Palo Alto Networks investors
Morgan Stanley’s move toward $253 It fits a broader pattern of analysts raising targets ahead of the June 2 report, driven by firewall demand, AI security traction and a cleaner identity story after CyberArk.
the case rests on Palo Alto exceeding its RPO and product revenue guides while showing early adoption of Idira.
The risk is an exaggerated valuation that has punished the stock even with good news.
Investors who already own PANW have a clear checklist for earnings day, and those waiting on the sidelines may want to see the quarter before paying near-record prices.
Either way, the demand trends Morgan Stanley is betting on will be tested in a matter of days.
Related: Ford Stock Hits Jackpot with Latest Move, Morgan Stanley Says
This story was originally published by TheStreet on May 22, 2026, where it first appeared in the Investments section. Add TheStreet as a preferred source by clicking here.
