How High, and Why, Analysts Are Chasing Palo Alto Higher After Earnings

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Palo Alto Networks Inc. (NYSE: PANW) is the new leader in anti-hacking and data security at the firewall and intelligence level. The company’s shares were indicated up marginally after earnings, but many Wall Street firms have raised their price targets yet again. The first thing to address is the earnings, with a full line of analyst calls after.

Palo Alto’s fiscal third-quarter adjusted earnings per share came to $0.23, on revenue of $234.2 million. This compared to $0.11 in earnings per share and revenue of $150.7 million a year ago, and the Thomson Reuters consensus estimates were only $0.20 in earnings per share and $223.22 million in revenue.

Guidance was put in a range of $252 million to $256 million in revenue, up 41% to 45%, with adjusted earnings per share of $0.24 to $0.25. The Thomson Reuters consensus estimates for the fourth quarter were $0.24 per share earnings on revenues of $247.67 million.

Again, analysts are chasing Palo Alto Networks higher with their respective price targets. Most analysts have a Buy rating, or the equivalent, and those that do not have only downgraded Palo Alto previously due to excessive valuations.

  • Bank of Merrill Lynch maintained its Neutral rating and raised its price objective to $170 from $155, saying again that most of the positive news is priced into the stock.
  • Credit Suisse maintained its Outperform rating but raised its target price from $165 to $190.
  • FBR Capital Markets reiterated its Outperform rating and raised its target to $175 from $165.
  • Needham reiterated its Buy rating and raised the target price to $182 from $160.
  • Oppenheimer reiterated its Outperform rating and raised its target to $180 from $175.
  • RBC Capital Markets reiterated its Outperform rating and raised the target price to $180 from $175.
  • Stifel reiterated its Buy rating and raised its target price to $180 from $165.
  • Wells Fargo reiterated its Outperform rating and raised its valuation range to $183.00 to $199.00 from a prior range of $174.00 to $181.00.

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More detailed summary calls follow.