Stephen Weiss, Founder, Short Hills Capital Partners Palo Alto Networks PANW-N COMMENT Nov 18, 2024

Cybersecurity is a mega-trend long term. Bit expensive at 50x forward PE for 13% growth, and that growth rate has come down. That's why he sold. Great channel of higher highs and higher lows.

They report Tuesday. It has a habit of falling after reporting earnings, so wait until after the report.

Reasonably priced. Safer than CRWD, though slower-growing. Overall security software space is very attractive -- one of the most defensive parts of the software industry.

Cybersecurity is the utility of technology, a necessity. Not economically sensitive, so won't get a big boost in a strong economy. But it's very consistent.

He could own this, but doesn't. Instead, he owns CRWD and a cyber ETF. Expectations in the group are high, and the multiples aren't cheap. He doesn't actually have a ton of tech exposure right now, having moved to more economically sensitive names.

CRWD and PANW are volatile, but demand is so strong for cybersecurity that these are long-term winners.

Really likes it, especially because they bought CYBR (one of his stocks ;)  Difficult call at this point. His price target is $185, and today it's trading ~$177. Then it will have to digest CYBR (still needs both regulatory and shareholder approval). China may use this as a pawn in negotiations. 

For new $$, he'd choose ANET instead.

Likes their purchase of CyberArk which will be accretive.

Cybersecurity recently is seeing a modest correction over a feeling that IT spending will pull back. This is puzzling, but the cyber threat remains and there's a need for security. We need strong guidance from PANW to see positive momentum. They report today.

The Cyberark acquisition will be accretive.

He's been in this name before, but doesn't own anything in the space right now. All the names are pricey. A larger player, but it's not inexpensive.