Palo Alto Networks (PANW) recently received another vote of confidence from Wall Street, and it came at a busy time for the stock.
Shares closed on $247.55 on May 18near a fresh high all the time reached days earlier.
That’s for stock down 20% In the past year, that swing is important to whoever owns it.
This new call gives investors something tangible to measure before the company opens its books.
Palo Alto Networks is the largest pure-play cybersecurity firm by market value. SOPA Images / Getty Images
Morgan Stanley raises its PANW price target to $253 on firewall and AI security demand
Morgan Stanley analysts Meta Marshall and Keith Weiss raised their price rating on Palo Alto Networks. to $253 from $223 on May 20, to maintain an overweight rating, TipRanks reports.
That’s about it 2% more since the May 18 close, modest on its own but remarkable given how far the stock has already run.
The bank indicated strong demand on the other side the firewall refreshes, Prisma SASE, Cortex XSIAM again AI security as drivers.
Updating the firewall a cycle in which companies replace aging network hardware, and that replacement wave is now generating revenue.
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The company is focusing its new target on a more than 37x more of 2027 free cash flow per share, from 32xa sign that now thinks investors will pay more for every dollar that Palo Alto produces.
Why Palo Alto Networks’ timing points directly to June 2 earnings
Development is not random. Palo Alto Networks reports third-quarter financial results on June 2 after the market closes, and analysts are standing by.
Morgan Stanley expects the company to beat consensus on remaining operating obligations, a measure of futures contract revenue shows claim the income statement has not been written.
The bank sees it RPO is growing at close to 33% year over yearabove the midpoint of management guidance.
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It also expects product revenue to remain above average 25% growth managers are directed to.
Two recent prints set the table: Fortinet grew product revenue 41% in its first quarter and raised full-year guidance, per sec.gov, while Cisco hit the network.
Like that strong numbers from rivals it usually shows that the entire firewall market is healthyworking in harmony with Palo Alto.
How Idira’s ownership launch is reshaping Palo Alto Networks’ growth story
A major structural change it rests on identity security, the task of controlling who and what can access a company’s systems.
That task is getting harder immediately.
As AI agents begin to operate within their own internal companies, the number of things that require permission to access and transfer data is exploding, and each one is mandatory.
Palo Alto is about to own that problem. As announced in a Palo Alto press release, the company launched Idira on May 12 as the next generation identity platformbuilt to manage access to humans, machines, and AI agents.
The launch makes the company’s $25 billion acquisition of CyberArk a built-in part of the platform rather than a separate, standalone product.
Morgan Stanley sees three important reasons for Idira:
It gives clear answer why ownership is within the safety field, since agent AI makes lucky access more common.
It paves the way for sales at Palo Alto’s base of more than 70,000 customers.
Enables existing CyberArk customers add zero-trust and machine ownership tools over time.
The thesis is that identity becomes the fourth pillar on the network side, cloudagain security functions, increasing how much each customer can spend.
What still needs to go right for PANW’s $253 target to hold
A high target is not a guaranteeand the setup carries a real risk.
The stock trades at a premium, with forward earnings significantly above the market, so any volatility in growth could hit shares hard.
Palo Alto down more than 5% after its last two earnings reports despite beating estimates, it’s a reminder that a strong quarter doesn’t always lift a stock.
Morgan Stanley also flagged potential pressure on hardware gross margins from rising memory costs, although it noted that hardware makes up a smaller portion of Palo Alto’s revenue than it does for competitors.
In order for the bull box to work, there are a few things that need to be in place.
Here are four signs to watch for on June 2:
RPO growth is 32% to 33%. that managers are directed to
Product revenue clears the 25% growth bar.helped by firewall pre-ordering
Next-Gen Security ARR holding it lightly 56% growth rate.
Early symptoms are customers using Idira and CyberArk tools
If management repeats its full-year guidance, as Morgan Stanley expects, the argument for strong demand becomes stronger.
How PANW stacks up to the broader market and its peers
Context helps here. Palo Alto holds a market value close to $176 billionwhich makes it the biggest name in pure-play cybersecurity.
The stock is up nearly 78% from its 52-week high of $139.57. very far away the S&P 500 over the same window, after touching a record high in mid-May.
However, Wall Street disagrees on the price, although it is broadly bullish.
The latter targets are more diverse.
Here’s where analysts stand before the benefits:
Oppenheimer set Street-high $275 after the CyberArk Impact event, Barchart reports
Faithful moved to $275 from $200, while RBC Capital raised its target to $255
Consensus ratio living nearby $223with a low of $114 and a high of $285, according to stock analysis data
That spread reflects the debate over valuation, not the company’s growth.
Takeaway for Palo Alto Networks investors
Morgan Stanley’s move $253 it fits a broader pattern of analysts raising targets ahead of the June 2 report, driven by demand for firewalls, AI security, and the clean identity story behind CyberArk.
The case resting Palo Alto hits its RPO and product revenue guidelines while reflecting Idira’s early acquisitions.
The risk is the extended valuation that has punished the stock even on good news.
Investors who already own PANW have a clear payday checklist, and those waiting on the sidelines may want to see a quarter before paying near record prices.
Either way, Morgan Stanley’s demand trends are betting that they will be tested in a few days.
Related: Ford stock hits jackpot with latest move, Morgan Stanley says
This story was originally published by TheStreet on May 22, 2026, where it appeared first in the investing category. Add TheStreet as a favorite source by clicking here.
