By Sam Boughedda
In a note on Palo Alto Networks (NASDAQ:PANW) on Thursday, Citi analysts stated that the company has quietly disclosed "one of the biggest deals in history."
The analysts reaffirmed a Buy rating and $213 price target on the stock, which is down 1.6% in the current session.
Palo Alto announced Wednesday that through ThunderCat Technology, a reseller of Palo Alto Networks products, it has entered into a nine-figure, multi-year deal to equip the Department of Defense (DoD) with Palo Alto Networks Internet Operations Management (IOM) capabilities, including the attack surface management solution, Cortex Xpanse. The company said it received an initial $67 million purchase order for the first three years during its FY23 Q1.
"Buried in an unassumingly titled press release yesterday, PANW disclosed a marquee, nine-figure, multi-year deal for its Internet Ops Management capabilities with the DoD. This deal includes the Cortex Xpanse Attack Surface Management offering, which will help give the DoD centralized visibility of its entire global network," wrote the analysts. "This is one of the largest software transactions in co history, and PANW noted receiving a $67M purchase order for the first three years of this beachhead win in F1Q23, results for which are due AMC tonight."
Citi is modeling a $64 million total NNARR for the whole quarter and said the deal not only reinforces its conviction on Palo Alto's accelerating momentum in the U.S. public sector but strengthens its "conviction that NGS ARR – despite its ~$2B scale – has scope to see durable 35-40%+ compounding growth."
"Our fears of 'large deal execution' are significantly assuaged," added the analysts.