Palo Alto Networks Stock Is Down But Not Out: Is PANW Worth Buying Here?

Palo Alto Networks (PANW) reported strong Q3 free cash flow on November 19, 2025. Additionally, its FCF margin increased over the trailing 12 months (TTM). As a result, PANW could be worth much more, but the stock is a long way from its highs. That makes it a solid buy for value investors here.

PANW is in $189.76 in midday trading on Monday, December 22. That’s significantly below a recent peak of $221.28. Recently, it has gone from a minimum of

I discussed his valuation in a Barchart article from November 24, 2025 (“Palo Alto Networks Shares Have Plunged, But Its FCF Is Strong: Price Target Is 15% Higher“). My conclusion is that based on Palo Alto Networks’ strong FCF margins and analyst revenue forecasts, PANW could be worth it. $212.16 per share.

That price target (PT) is still +11.8% higher than the current price.

Analysts have also been raising their PTs. For example, Yahoo! Finance shows that 55 analysts have an average PT of $225.42. That’s up from $224.59 a month ago.

I discussed shorting out-of-the-money (OTM) puts to establish a lower potential buy point. That way, an investor can get paid while they wait.

For example, on November 24th I talked about the $180 strike price put option expiring on December 26th. At the time, PANW stock was at $185.35, so this $180 strike price was 2.89% below the stock price, i.e. out-of-the-money (OTM).

The premium received then was high: $4.60. This represented a short-term return of 2.56% (i.e. $4.60/$180.00) for the next month.

Today, the premium has fallen to $0.07. So, this short put play has been successful. The investor keeps the proceeds and the option will likely expire worthless, with no obligation for the short seller to buy shares at $180.

Also note that PAWN is only up 2,379% in the last month. Therefore, shorting the OTM put has actually made more money than owning the stock.

Therefore, it makes sense to do this trade again. For example, the option expiration period of January 23, 2026 shows that the put option with strike price of $180.00 has a midpoint premium of $2.28.

That gives a short seller a one-month return. 1.267% (i.e. $2.28).

For less risk-averse investors, shorting the $185.00 put option contract provides $3.55, or $355 for an investment of $18,500. That is equivalent to a one-month return. 1.9189%.

Doing a 50/50 combination of these two contracts would provide the investor with a 1.593% return (i.e. $2.915 average income / $182.50) with an OTM distance of 3.825% from the trading price.

The risk of PANW falling to $182.50 on average is only 29.2%. That’s less than a 30% chance that the investor will be obligated to buy shares at both strike prices.

This shows that shorting OTM is a profitable way to establish a lower potential purchase price. For example, the breakeven point with a 50/50 mix is ​​only $179.59 (i.e., $182.50-$2.915).

This provides a potential upside of 18.1% (i.e. $212.16/$179.59-1 = 0.1814).

The bottom line is that Palo Alto Networks looks cheap here. Selling short puts that have strike prices below the trading price is one way to profitably trade PANW stock.

On the date of publication, Mark R. Hake, CFA had no positions (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com