How Palo Alto Networks Is Lifting the Cybersecurity Industry

Palo Alto Networks Inc. (NYSE: PANW) faked out investors Wednesday night, initially dipping in response to its fourth-quarter earnings report. However, this quickly righted itself Thursday morning. Palo Alto Networks generally is seen as a bellwether for the cybersecurity industry, and sure enough, cybersecurity stocks rallied in response.

24/7 Wall St. has included some brief highlights from Palo Alto Network’s earnings report and recent acquisition announcement, as well as what some of the other players in the industry were doing Thursday.

Palo Alto Networks said that it had $1.47 in earnings per share (EPS) and $805.8 million in revenue, compared with consensus estimates that called for $1.42 in EPS and $802.42 million in revenue. The same period of last year reportedly had $1.34 in EPS and $658.1 million in revenue.

Overall revenues grew 22% year over year. Product revenues grew 12% to $305.7 million, while subscription and support revenues grew 29% to $500.1 million. During the quarter, billings grew 22% year over year to $1.1 billion.

The company also announced that it is acquiring Zingbox, a differentiated player in Internet of Things security, which continues management’s strategy of extending its platforms. Zingbox will add to the capabilities of Palo Alto Networks’ Next-Generation Firewall by offering a first of its kind subscription that will make it easier for organizations to protect Internet of Things devices from attackers.

As for the price tag, Palo Alto Networks will be paying $75 million in cash. The proposed acquisition is expected to close during Palo Alto Networks’ fiscal first quarter of 2020, subject to the satisfaction of customary closing conditions.

Shares of Palo Alto Networks traded up about 6% Thursday, at $212.68 in a 52-week range of $160.08 to $260.63. The consensus price target is $263.30.

Looking around the rest of the industry, there seems to be a fairly positive response. Thursday’s market rally is also helping to prop up these stocks.

  • FireEye Inc. (NASDAQ: FEYE) shares were up nearly 2.0% to $13.30, in a 52-week range of $12.66 to $20.61.
  • Fortinet Inc. (NASDAQ: FTNT) shares were up 2.0% to $79.84, in a 52-week range of $64.41 to $96.96.
  • CyberArk Software Ltd. (NASDAQ: CYBR) shares were up 1.5% at $116.01. The 52-week range is $64.66 to $148.74.
  • Splunk Inc. (NASDAQ: SPLK) shares were up 1.5%, at $111.38 in a 52-week range of $83.69 to $143.70.
  • Workday Inc. (NASDAQ: WDAY) shares were up 2.0%, at $177.37 in a 52-week range of $117.72 to $226.83.