What does the Palo Alto Networks stock split mean for investors?
Palo Alto Networks (PANW) will conduct its first-ever stock split after announcing strong fiscal fourth-quarter results last month.
The cybersecurity firm said it would launch a three-for-one split, meaning investors will receive two additional shares for each one they already own.
Palo Alto went public in July 2012 at $42.00 per share. The shares closed at $547.25 on Sept. 8 on a pre-split adjusted basis.
Palo Alto Stock Split Date
The Palo Alto stock split is expected to take place after the market closes on September 13.
The Palo Alto Stock Split and What It Means
The split will not affect Morningstar’s fair value estimate of $590.00 per share, equity analyst Malik Ahmed Khan said. That estimate will be adjusted to around $197.00 to account for the increase in the number of shares outstanding, according to Khan. The company’s Morningstar Economic Moat Rating of Wide, meaning it has a competitive edge over rivals, will also not be affected by the split.
“Palo Alto’s platform-leading approach to network security, cloud security and security automation drives organizations to consolidate their spending on its products, which we believe increases switching costs,” says Khan. “We expect the company to reap the positive effects of locking customers into its ecosystem as it approaches GAAP profitability on a more consistent basis.”
Palo Alto shares will retain their 3-star Morningstar rating after the split, meaning the shares will still be considered fairly valued by Khan.
“As organizations upgrade their networks for hybrid working and to utilize more cloud-based resources, we believe Palo Alto has a holistic security blanket that protects against the broader threat environment, which which keeps demand resilient,” says Khan.
Other stock splits
Palo Alto is one of many companies to split their stock this year. You’re here (TSLA) had a 3-for-1 stock split in August. Amazon (AMZN) had a 20-to-1 split in June, and Alphabet (GOOG) (GOOGL) launched its own 20-for-1 division in July.