109% Growth in Five Months: Who Benefited from Palo Alto's Surge in Tel Aviv
Even before its inclusion in the indices next week, the cybersecurity giant's stock has generated significant interest in Tel Aviv: average daily volume reached 8.5 million shekels, the share price has doubled since listing, and the company's value accounts for 30% of the entire stock market. The Exchange: "Inclusion in the indices will move it into a different league in terms of demand and liquidity."
On Thursday next week, a little less than six months after it began trading as part of the dual listing on the Tel Aviv Stock Exchange, cybersecurity giant Palo Alto Networks will be added to the exchange's leading indices, TA-35 and TA-125. Since it was registered for trading, Palo Alto has become one of the hottest stocks on the local exchange, with a rise of 109%. The impressive surge has established its status as the largest company on the exchange by a wide margin, and it is currently trading at a market cap of 813 billion shekels.
For comparison, the largest companies after it in Tel Aviv are the defense company Elbit Systems with a value of about 116 billion shekels, the pharmaceutical company Teva with about 111 billion shekels, and Bank Leumi with 105 billion shekels. In fact, Palo Alto's value accounts for almost 30% of the value of all companies traded on the Tel Aviv Stock Exchange (over 550 companies).
According to exchange data, since it began trading in February, the cybersecurity giant's stock has accumulated a trading volume of over 850 million shekels, reflecting an average daily volume of about 8.5 million shekels. On average, over 600 transactions are executed in the stock per day, all while Palo Alto is not yet in the indices.
The exchange adds that the stock of the American cybersecurity company founded by Israeli Nir Zuk (who left the company about a year ago) has shown high liquidity and interest from a wide range of investors since trading began. About 18% of trading volumes were executed by institutional investors and portfolio managers, about 20% by foreign investors, and about 15% by Israeli retail investors.
The share of retail investors is higher than their general share in stock trading on the exchange, which stands at about 12%. According to Yaniv Pagot, VP of Trading at the exchange, "The absorption of the Palo Alto stock on the exchange was particularly impressive, especially in light of the fact that until now it has traded outside the exchange's indices."
He adds that "Already in the first months, we saw high liquidity in the stock and significant trading volumes, activity from foreign investors, and high interest from private investors in Israel. This success proves the feasibility and enormous advantages of a dual listing, which allows companies to enjoy access to a high-quality local capital pool and diversify their investor base. The entry into the flagship indices, which will take place gradually starting August 6, is expected to place the stock in a different league in terms of demand and liquidity and be a significant milestone in its establishment in the Israeli capital market."
Does the stock have room to rise?
Palo Alto, managed by Nikesh Arora, "missed" the last index update in Tel Aviv because it did not meet the condition that a stock must trade on the exchange for 60 days before its entry into an index. In accordance with the decision of the exchange's index committee this month, the stock will be added to the indices at the time of the quarterly parameter update, on August 6.
Since it is an American company - even though it has extensive operations in Israel, especially after it recently acquired CyberArk - its weight in the TA-35 index will be limited to 5% and will not reach the maximum ceiling of 7%. The weight will increase gradually, according to index rules. Accordingly, the actual weight of the Palo Alto stock upon joining the index next week will be 25% of its true weight (1.25%), at the next index update in November it will rise to 50% (2.5%), and only at the third update date after its addition to the indices will it reach its full weight.
It is reasonable to assume that the addition of Palo Alto to the indices will lead to demand. But does the stock still have room to rise after the sharp increase in recent months, or has the move already been exhausted? The vast majority of analysts covering Palo Alto hold positive positions regarding the stock. According to Wall Street Journal data, 44 out of 56 analysts recommend the stock with "buy" or "overweight" ratings; 10 are neutral and only 2 are negative. The average target price of all analysts reflects a not very high premium of about 7.6% over the current price on Nasdaq.
The American investment bank William Blair recently published a positive recommendation on the stock, stating that Palo Alto is the preferred choice in the cybersecurity field and that the company is enjoying high demand - against the backdrop of concerns about security weaknesses due to the development of AI.
Palo Alto's fiscal year is not identical to the calendar year - it begins in August and ends in July. That is, the company is finishing the 2026 fiscal year these days, and it will publish financial reports during August, already after it is added to the indices. According to analyst forecasts, the company will show an annual growth of about 24% in revenue to 11.4 billion dollars, partly thanks to the acquisitions it completed in the last year, of CyberArk and Chronosphere. The net profit per share is expected, according to analyst estimates, to reach 3.77 dollars, compared to 3.34 dollars in the previous fiscal year.
The importance of CyberArk
As recalled, Palo Alto was registered for trading on the local exchange after it completed the acquisition of the Israeli CyberArk in a cash and stock deal worth about 21.5 billion dollars at the time of completion. CyberArk, which was managed until its sale by CEO Matt Cohen and founding chairman Udi Mokady, focused on a specific niche in the cybersecurity world - identity security in an organization.
The importance of the field has increased greatly in recent years with the expansion of identities in every organization and the entry of non-human identities, which also need to be secured against cyberattacks. At Palo Alto, they identified that the part in which CyberArk specializes is exactly what was missing from its platform, certainly against the backdrop of AI development and the entry of AI agents - and chose to cut processes and acquire CyberArk instead of building a solution of their own.
In the conference call after the publication of the latest reports (of the first quarter after the completion of the CyberArk acquisition), CEO Arora said that the number of AI agents is growing, and every such autonomous entity is another identity that must be managed at the security level. According to him, CyberArk exceeded the internal targets it had. Together with the smaller acquisition of the American Chronosphere, both companies contributed 338 million dollars of the quarter's revenue, which amounted to 3 billion dollars.
At the same time, shortly after the acquisition was completed, Palo Alto launched a new product in the identity field based on the CyberArk acquisition. Last week, the investment bank Cantor published a review ahead of the reporting season for cybersecurity companies, and noted positively in Palo Alto the identity field, while in general, according to it, this is one of the areas on which there is currently an emphasis in the industry.
