Palo Alto Networks (NASDAQ: PANW) stock jumped 11.1% through 10:05 a.m. ET Thursday on rumors the cybersecurity giant is shifting decisively into acquisition mode.
As StreetInsider.com reported yesterday, Palo Alto Networks spent much of the past two years trying to acquire cybersecurity rivals Okta and Datadog. Rebuffed on both counts, Palo Alto has moved on in search of easier targets — and may have already found two of them.
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Palo Alto on the hunt for value
Palo Alto tried to acquire its last two targets on the cheap, offering $13.5 billion for Okta (now worth $23 billion) and $40 billion for Datadog (now worth $80 billion). Management wouldn’t bite at either company, but Palo Alto was undeterred.
Was Palo Alto “penny-wise and pound-foolish” in refusing to up its bids on its last two targets, considering how much their stocks have gone up since? Perhaps. Another way to look at this is that Palo Alto management is being exceptionally careful not to overpay for its acquisitions.
That’s a good trait for management to have, from an investor’s perspective.
What’s next for Palo Alto stock?
It’s especially helpful to keep this in mind as Palo Alto begins “circling [its] next targets,” as StreetInsider puts it: Cribl and ClickHouse.
Artificial intelligence and telemetry company Cribl describes itself as having $200 million in annual recurring revenue, growing at 70% — and valued at $3.5 billion. ClickHouse is another AI-powered cyber company that says it has more than $250 million in ARR and a $15 billion private market value.
Of the two, Cribl is the only one that costs less than Palo Alto’s own 23.6x price-to-sales ratio. It’s the closest thing to a…
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