Wedbush analyst Daniel Ives maintained an Outperform rating on cybersecurity giant Palo Alto Networks, Inc. (NASDAQ:PANW) with a price forecast of $225 on Monday. The company will deliver its fiscal third-quarter 2025 results on Tuesday after the bell.

Ives expects to see strong cyber security deal activity across enterprises as the company continues laying the foundation for its platformization approach heading into fiscal 2026.

Palo Alto Networks continues to be one of the analyst’s favorite cyber security names to own over the next 12-18 months as the company generates a more stable pipeline of platformization deals with cloud penetration, which will still act as a major driver going forward.

Also Read: Palo Alto Eyes 15% Revenue Growth In Q3 Report

The analyst noted stronger deal flow in the field over the past few months and believes Palo Alto Networks is generating solid momentum for cybersecurity customer deployments on its platform now front and center. Ives also noted Palo Alto Networks would be a prime beneficiary of AI spending as cyber security is a clear second and third derivative play on the AI Revolution with more workloads and data heading to the cloud.

The Street numbers and the company’s guidance remain beatable, as per the analyst, as the company accelerates its platformization strategy into the next few years with more customers looking to consolidate vendors. Palo Alto Networks’ Next-Gen Security Annual Recurring Revenue (NGS ARR) will likely be uptick, with the company landing higher ARR deals in the pipeline. Greater platformization sales will act as the general framework for the company to reach its $15 billion NGS ARR target by 2030.

XSIAM and Cortex XDR remain key aspects of driving this platform strategy, with a steady booking pipeline of multi-million deals, as per the analyst.

The analyst believes that while the full impact may take time to materialize, the company is in the driver’s seat to gain market and mind share in the cyber security landscape. This is especially pertinent as a growing number of companies are expected to adopt artificial intelligence (AI) initiatives over the coming year.

According to the analyst, cyber security is a direct benefit of the AI Revolution, and Palo Alto Networks is well positioned to see incremental deal flow as more strategic enterprise AI projects take hold over the coming year.

Ives also expects to see further strength of Palo Alto Networks’ AI products with the recent launch of its AI suite, including Access, security posture management (SPM), and runtime, which continues to generate greater scale for its platformization approach in the field.

Ives expects to see further sequential upticks in average ARR per platformized customer as Palo Alto Networks focuses on converting its current customer to its platform while its ARR tied to AI products drives further momentum into the pipeline.

The analyst noted that the key focus of the conference call will be deal metrics and commentary from CEO Nikesh Arora. Ives projected fiscal 2025 revenue of $9.17 billion and EPS of $3.21.

The analyst believes Palo Alto Networks is poised for strong third-quarter 2025 results, driven by increasing cybersecurity deal activity and accelerated adoption of its platformization strategy, particularly benefiting from the AI Revolution’s impact on cloud workloads.

Palo Alto Networks anticipates NGS ARR to be between $5.03 billion and $5.08 billion, representing a year-over-year increase of 33%-34%. The company also expects its Remaining Performance Obligation (RPO) to reach $13.50 billion to $13.60 billion, indicating a 19% to 20% year-over-year growth. For fiscal year 2025, Palo Alto Networks projects its total revenue to be up 14% year-over-year.

Price Action: PANW is trading lower 0.38% to $193.55 at last check Tuesday.

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