Analysts heap praise on Palo Alto after another solid earnings report

By Senad Karaahmetovic

Palo Alto Networks (NASDAQ:) saw its stock soar over 8.5% pre-open Friday after the cybersecurity company reported better-than-expected earnings for its first fiscal quarter.

PANW reported of $0.83 on revenue of $1.6 billion, beating the average analyst estimate that called for an EPS of $0.69 on revenue of $1.55B. Revenue grew 25% year-over-year while billings rose 27% YoY to $1.7B.

“We exceeded our top-line guidance while generating $1.2 billion in free cash flow and expanding our operating margins,” said Dipak Golechha, the chief financial officer of Palo Alto Networks. “We will continue to balance growth with profitability and cash generation to further strengthen our position in the market.”

For this quarter, Palo Alto sees billings between $1.94B and $1.99B and revenue between $1.63B and $1.66B. Analysts were expecting FQ2 billings of $1.95B and revenue of $1.65B.

The adjusted EPS is expected to be at $0.77 (the midpoint), easily above the $0.70 consensus. For the full-year 2023, Palo Alto sees billings in the range of $8.95B to $9.1B, revenue between $6.85B to $6.91B, and adjusted earnings per share from $3.37 to $3.44.

Data compiled by Bloomberg shows Palo Alto analysts were looking for full-year adjusted EPS of $3.15 on revenue of $6.87B.

In a separate announcement, PANW announced it has acquired Cider Security for $195M in cash.

Analysts heaped praise on PANW after earnings, saying that the company continues to execute in a difficult macro environment. Mizuho analysts reiterated a Buy rating and a $220 per share price target on Palo Alto stock.

“We remain very constructive on PANW’s improving mix shift toward higher-growth recurring revenue, and we reiterate our view that the co. clearly possesses the strongest array of cloud assets among traditional network security vendors. PANW remains a top pick,” they said in a client note.

Wolfe Research analysts cut the price target to $225 per share from $238 but remain very positive on PANW stock after “solid” earnings.

“We continue to view PANW as one of the best long term stories in our security coverage,” they said in a note.

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