New York, February 18, 2026, 17:43 EST — After-hours
- Palo Alto Networks shares fell 6.8% in after-hours trading, last at $152.35.
- The company lowered its fiscal 2026 adjusted profit forecast as integration costs rise, even as it lifted its revenue view.
- Investors are watching whether acquisitions translate into higher recurring sales without further margin strain.
Palo Alto Networks (PANW) shares slid 6.8% in after-hours trading on Wednesday, last at $152.35, after the cybersecurity firm reset expectations for the year as deal-related costs bite.
The drop matters because Palo Alto has been leaning on acquisitions to widen its platform just as customers push to consolidate vendors. A softer profit outlook puts a spotlight on the trade-off: faster growth and a bigger product stack, versus near-term pressure on margins and cash.
Palo Alto said it now expects fiscal 2026 adjusted earnings per share of $3.65 to $3.70, down from its prior $3.80 to $3.90 range, after higher integration costs tied to recent acquisitions, including its $25 billion CyberArk deal. Morgan Stanley trimmed its price target to $223 and called the post-earnings drop “overdone,” while Wedbush kept an outperform rating and said the stock was “one of our favorite cyber names to own in 2026.” (Investopedia)
The company also raised its fiscal 2026 revenue forecast to $11.28 billion to $11.31 billion from $10.50 billion to $10.54 billion, as it tries to position itself as a one-stop shop for customers facing AI-driven threats. Morningstar analyst Malik Ahmed Khan said the profitability hit was largely acquisition-driven. (Reuters)
In its fiscal second quarter ended Jan. 31, Palo Alto reported revenue up 15% to about $2.6 billion and non-GAAP earnings of $1.03 a share, saying it saw “continued strength in platformizations.” Next-Generation Security ARR — annual recurring revenue used as a proxy for subscription run-rate — rose 33% to $6.3 billion, while remaining performance obligation, a measure of contracted revenue not yet recognized, grew 23% to $16.0 billion. For fiscal 2026, Palo Alto also guided to a non-GAAP operating margin of 28.5% to 29.0%, adjusted free cash flow margin of 37%, and said its adjusted figures exclude items such as stock-based compensation and acquisition-related costs. (SEC)
A day earlier, Palo Alto said it had signed a definitive agreement to acquire Koi, pitching the deal as a way to secure AI agents and tools running on endpoints with broad access to data. Chief Product and Technology Officer Lee Klarich called AI agents and tools “the ultimate insiders,” and the company said it plans to integrate Koi into its Prisma AIRS platform and Cortex XDR after the deal closes. (Palo Alto Networks)
Cybersecurity peers were mixed by the close, with Fortinet down 1.2% and Check Point off 0.6%, while CrowdStrike and Okta posted small gains.
For Palo Alto, the next question is timing: how quickly higher recurring sales and platform deals show up against the cost of stitching products and teams together. Traders will also watch whether the company’s growth in subscription metrics holds as customers weigh bigger “platform” purchases.
But the risk is that integration runs longer, sales cycles stretch, or competition forces sharper discounting across network, cloud and identity security. Another earnings reset would likely keep the stock under pressure, even if revenue holds up.
The next test comes at the U.S. open on Thursday, Feb. 19, when investors work through follow-on broker notes and any new color on integration costs and deal timing.
