$PANW

Explicit claim • strong conviction • basis: multiple relative

But the valuation has gotten ahead of itself. Palo Alto Networks is now trading at a forward earnings multiple of 78, and if we go back to 2024, this valuation is on a whole other level. So, the company has been repriced. Investors have repriced this business and they're willing to pay almost double the valuation that they were paying two years ago, before the proxy AI narrative. And in my opinion, this repricing is too much. I agree that it should have been repriced, but maybe not to a forward earnings multiple of 80. Maybe it would have gotten to a forward earnings multiple of 60 or 65 even, but not to 80 or 85 like it did earlier this year. A few weeks ago, the valuation has gone up dramatically and peaked. So, I also updated my valuation for Palo Alto Networks using discounted cash flows, and I valued the stock at $164. It's now trading at $385. So, I see a lot of overvaluation in Palo Alto Networks whether you look at it through the forward earnings multiple or based on discounted cash flows.

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.

Explicit claim • strong conviction • basis: multiple relative

justify trading at 173 times earnings