Palo Alto Networks PANW and Qualys QLYS are two cybersecurity giants playing critical roles in securing enterprise environments, but in very different ways. While Qualys serves a niche space involving vulnerability management and compliance monitoring, Palo Alto offers a comprehensive suite of firewalls, cloud and endpoint security solutions for customers who need full enterprise security support.
Both these companies are capitalizing on the massive growth of the cybersecurity industry, fueled by the rise of complex attacks, including credential theft and abuse, remote desktop protocol attacks and social engineering-based initial access. Per a Mordor Intelligence report, the cybersecurity market is projected to witness a CAGR of 12.63% from projecting a robust CAGR of 9.4% from 2025 to 2030.
With this robust industry growth forecast, the question remains: Which stock has a more upside potential? Let’s break down their fundamentals, growth prospects, market challenges and valuation to determine which offers a more compelling investment case.
The Case for Palo Alto Networks
Palo Alto is a leader in cybersecurity, providing solutions for network security, cloud security and endpoint protection. PANW’s next-generation firewall and advanced threat detection technologies are widely recognized and adopted globally.
PANW’s innovative product offerings, strong customer base and expanding market opportunities in areas like Zero Trust and private 5G security solutions drive its growth potential. Palo Alto's strategic vision and continuous technological advancements make it a compelling long-term investment opportunity.
For instance, PANW enhanced its Prisma Cloud platform by introducing Prisma Cloud Copilot, which leverages generative AI to simplify security analysts' tasks. This feature enables analysts to understand and respond to user queries in natural language more efficiently. Furthermore, Prisma Cloud recently secured FedRAMP authorization, which will help it to attract a growing number of federal agencies.
The company has also expanded its presence in the APAC region by implementing new cloud infrastructure that will help the company to provide cloud security solutions to the large organizations operating in this region while also aiding PANW in meeting its Platformization goals.
These factors have led Palo Alto to improve both its top and bottom lines. The Zacks Consensus Estimate for Palo Alto’s 2025 earnings is pegged at $3.22, indicating a year-over-year increase of 13.4%.
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The Case for Qualys
QLYS, being the leading provider of Vulnerability Management, Detection and Response (VMDR) solutions, has been witnessing increased VMDR customer penetration for the past several quarters. 73% of Qualys customers with more than $500,000 annual recurring revenues now use four-plus modules offered by Qualys. This number has increased from the previous year’s 63%.
QLYS has increased the depth of its portfolio with multiple product launches and enhancements, including the industry’s first Risk Operations Center with Enterprise TruRisk Management. The company also launched Qualys TotalAI to de-risk generative AI and large language model applications from cyber breaches. Increased focus on cloud-based offerings has resulted in 20% year-over-year growth in Cloud agent subscriptions.
However, Qualys, being a significantly smaller player, faces competition from numerous large players with deep financial resources. The competition from players with strong multi-module expertise like Palo Alto Networks and other larger players makes the prospects of Qualys a little dull.
To counter these challenges, QLYS is focusing on sales enablement and broadening its platform. However, its efforts are taking time to materialize and hurting profitability. The Zacks Consensus Estimate for Qualys’ 2025 earnings is pegged at $5.75 per share, reflecting a year-over-year decline of 6.2%.
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Stock Price Performance and Valuation of PANW and QLYS
Due to broader market correction, both stocks have plunged in recent times. However, over the past year, Palo Alto has returned 14% while Qualys shares have lost 29.8%.
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QLYS is trading at a forward sales multiple of 6.43X, way below its median of 11.41X, over the past three years. PANW is trading at a forward sales multiple of 10.01X, above its median of 9.35X, over the past three years. PANW does seem pricey compared with QLYS. PANW’s valuations also reflect its high growth expectations and robust profitability. If the company sustains its execution, the premium could be warranted. On the contrary, Qualys’ slowing growth raises questions about its ability to capitalize on the booming cybersecurity market.
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Conclusion: Palo Alto vs Qualys Stock
Palo Alto’s leadership in the cybersecurity space provides strong revenue visibility for years to come. While the stock trades at a premium valuation, its explosive growth prospects and strong financial execution more than justify the price. However, Qualys’ near-term growth trajectory is likely to face challenges from rising competition from larger players and its shrinking profit.
Currently, Palo Alto carries a Zacks Rank #3 (Hold), making the stock a stronger pick compared with Qualys, which has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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