$PANW

Explicit claim • strong conviction • basis: multiple relative

So, the increase in stock price hasn't been accompanied by subsequent increases or proportional increases in profitability, and so that's caused the valuation to soar. It's now trading at a forward price to earnings of over 75, and that's much more expensive than this stock has traded for going back several years according to this valuation metric. Today, I updated my discounted cash flow model for Palo Alto Networks, and my revisions were higher. I expect more from this company in terms of free cash flow over the next several years, and I expect a better growth rate from the company going forward. Still, after accounting for the company's better growth expectations, the stock looks overvalued compared to my estimates. The current market price at $364 is more than double my fair value estimate at $161.

Explicit claim • strong conviction • basis: market mispricing

I think and then I think investors are not factoring in what the demand's going to look like for a Palo Alto.

Explicit claim • strong conviction • basis: multiple relative

But even at a 15x multiple on this year of sales of 11.3 billion gives us a fair value of $170 billion market cap. That's about a 17% upside from here to $213 a share and long-term room to grow on that 20% annual growth.

Implied claim • moderate conviction • basis: technical only

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