What to Look for in Palo Alto Network Earnings

August 29, 2016 by Chris Lange

Palo Alto Networks Inc. (NYSE: PANW) is scheduled to release its fiscal fourth-quarter financial results after the markets close on Tuesday. Over the past few years this company was a momentum trader’s dream before crashing back to earth. This earnings report has the potential to rekindle the flame that pushed this stock higher in the first place. With markets near all-time highs and a surge in the tech sectors, Palo Alto has the potential to move.

The consensus estimates from Thomson Reuters call for $0.50 in earnings per share (EPS) on $389.89 million in revenue. The same period from last year reportedly had EPS of $0.28 and $283.88 million in revenue.

Unlike fragmented legacy products, the Palo Alto security platform safely enables business operations and delivers protection based on what matters most in today’s dynamic computing environments: applications, users and content. The platform has new features that were introduced to help security professionals overcome the distractions and time spent on problems caused by the overwhelming volume of alerts and manual processes associated with operating many discrete security products, and, instead, expand breach prevention capabilities and boost operational efficiency.

The company continues to be ranked the highest with the Wildfire product, which has been the favorite in the advanced persistent threat space among the value added resellers who carry and sell the product. Toss in solid upside in billing potential for 2016 and 2017, and the story is a killer going forward. Many analysts on Wall Street have made it clear that the feedback they get from the professionals at security conferences is the most bullish on Palo Alto, and the company is gaining real traction with larger data centers’ firewalls.

Prior to the release of the earnings report, a few analysts weighed in on Palo Alto Networks:

  • Pacific Crest reiterated an Overweight rating with a $190 price target.
  • Imperial Capital reiterated an Outperform rating with a $190 price target.
  • Nomura reiterated a Buy rating with a $200 price target.
  • Barclays has a Buy rating with a $184 price target.
  • Morgan Stanley reiterated an Overweight rating with a $185 price target.
  • Cleveland Research has a Neutral rating.
  • Citigroup has a Neutral rating.
  • Macquarie has a Neutral rating with a $139 price target.
  • Wunderlich reiterated a Buy rating.

So far in 2016, Palo Alto has vastly underperformed the broad markets, with the stock down 20%. Over the past 52 weeks, the numbers get a little better with the stock down about 16%.

The stock was trading at $140.49 on Monday, with a consensus analyst price target of $183.72 and a 52-week trading range of $111.09 to $194.73.

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