Palo Alto, CrowdStrike Stocks Reverse Lower Despite Analyst Upgrade, Rosenblatt Price Target Hike

Palo Alto Networks Inc. (NASDAQ:PANW) and cybersecurity peer CrowdStrike Holdings Inc. (NASDAQ:CRWD) are trading lower Friday despite KeyBanc upgrading Palo Alto, citing accelerating security spending and naming both companies as the primary winners from customers consolidating their security vendors. Separately, Rosenblatt raised its CrowdStrike price target to $275 from $250 and maintained a Buy rating.

• Palo Alto is in focus today. What’s moving PANW shares?

KeyBanc Flips to Overweight, Citing 2027 Budget Surge

KeyBanc analyst Eric Heath upgraded Palo Alto to Overweight from Sector Weight and set a $380 price target, implying roughly 18% upside from the $322.66 level cited in the note. Heath called the stock’s roughly 20% decline over the past month an attractive entry point.

The upgrade rests largely on a call that security budgets will accelerate sharply. Chief information security officers at a KeyBanc event in New York last month suggested budget growth starting 2026 in the mid-single digits, climbing to the mid-teens by year-end and surpassing 20% in 2027. A separate CISO dinner in Washington this week was more measured but still positive, with attendees describing an "open checkbook" amid the AI-driven threat environment.

Heath also expects the mix of spending to shift in Palo Alto’s favor, moving away from services, code scanning and staffing toward technology modernization, securing AI and defense-in-depth tools. KeyBanc’s third-quarter reseller survey showed every partner meeting or beating plan, security growth accelerating for a fourth straight quarter and two-thirds of partners seeing a spending inflection tied to Mythos, up from one-third in the second quarter.

Platform Players Pulling Away From the Pack

Customers and channel partners continue to favor vendor consolidation, with Palo Alto and CrowdStrike seen as the primary winners, according to KeyBanc. Heath said both companies saw a more meaningful inflection in the calendar second quarter than other cyber peers, a sign the platform vendors are capturing more of the incremental budget, a trend he expects to continue through 2027.

Heath pointed to Palo Alto’s lineup across exposure management, AI security, AI-driven security operations, endpoint, identity, observability and SASE as aligned with top CISO priorities. One channel partner relayed that rival vendors complain Palo Alto keeps "stealing our customers" through aggressive platform selling.

KeyBanc’s fiscal first-quarter checks with U.S. and international partners, representing more than $4 billion in annual Palo Alto business, improved both sequentially and year over year. All but one partner were at or above plan for the October quarter, and weighted average growth among those resellers accelerated meaningfully.

What Changed Since the CyberArk Downgrade

KeyBanc cut Palo Alto following the CyberArk acquisition last year, citing tepid budgets, doubts about the company’s position in identity and cautious customer feedback. Heath said the firm’s macro view on budgets, Palo Alto’s product execution and customer appetite for consolidation have all improved since then, though KeyBanc remains cautious on CyberArk.

The firm models fiscal 2027 earnings of $4.17 per share on revenue of $14.15 billion, ahead of the $3.96 consensus. For the fiscal first quarter, KeyBanc expects EPS of 97 cents on revenue of $3.31 billion.

Heath flagged competition from frontier AI labs, budgets failing to improve, leadership turnover, disruption from a heavy M&A pace and a potential firewall slowdown as key risks.

Palo Alto, CrowdStrike Trade Lower

Price Action: At the time of publication, Palo Alto shares are trading 1.65% higher at $317.33 and CrowdStrike shares are trading 3.29% higher at $222.30, according to data from Benzinga Pro.

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