Are Analysts Too Optimistic on Palo Alto Networks?
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Palo Alto Networks Inc. (NYSE: PANW | PANW Price Prediction) reported its fiscal second-quarter financial results after the markets closed on Monday. Even though investors treated this as a fairly dismal report, analysts were not completely sold on the idea. In fact, a few still maintain there is solid upside for this cybersecurity firm despite these recent pullbacks.
24/7 Wall St. has included some brief highlights from the earnings report, as well as what a few analysts are saying about Palo Alto Networks after the fact.
The cybersecurity firm said that it had $1.19 in earnings per share (EPS) and $816.7 million in revenue. This compares with what analysts were calling for: $1.12 in EPS and $843.26 million in revenue. The same period of last year reportedly had $1.51 in EPS and $711.2 million in revenue.
Overall revenues grew 15% year over year. Product revenues decreased 9.2% to $246.5 million, while subscription and support revenues grew 29.7% to $570.2 million.
During the quarter, billings grew 17% year over year to $998.9 million. Deferred revenue increased 27% year over year to $3.2 billion.
Looking ahead to the fiscal third quarter, the company expects to see EPS in the range of $0.96 to $0.98 and revenue between $835 million and $850 million. Analysts are calling for $1.25 in EPS and $873.08 million in revenue for the quarter.
Here’s what analysts had to say:
- Wedbush maintained its Outperform rating but trimmed its target price to $240 from $275.
- Mizuho maintained a Buy rating but lowered its price target to $245 from $265.
- RBC Capital Markets downgraded it to Sector Perform from Outperform and lowered its target to $235 from $280.
- JPMorgan downgraded it to Neutral from Overweight and cut its target to $235 from $285.
- Merrill Lynch reiterated its Neutral rating and lowered its price objective to $240 from $265.
- BMO cut it to a Market Perform rating from Outperform and lowered its target to $220 from $248.
- Deutsche Bank downgraded it to Hold from Buy and lowered its price target to $210 from $275.
Palo Alto Networks stock traded down 15% to $201.11 on Tuesday, in a 52-week range of $192.17 to $260.63. The consensus price target is $265.23.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
