Palo Alto Gains 8% on Earnings, Guidance Beat; Analysts Bulled-up

© Shutterstock Palo Alto (PANW) Gains 8% on Earnings, Guidance Beat; Analysts Bulled-up

By Senad Karaahmetovic

Shares of Palo Alto Networks (NASDAQ:PANW) are up more than 9% in pre-open Tuesday after the security software company reported strong results and offered upbeat guidance.

Palo Alto reported an adjusted EPS of $2.39 to beat the consensus of $2.28 while revenue was in line with expectations at $1.55 billion. The company reported billings growth of +44%, much better than the estimate of 25.1%.

“Next-Generation Security growth, driven by our rapid pace of innovation and strong sales execution, drove our results,” said Nikesh Arora, chairman and CEO of Palo Alto Networks.

For the ongoing quarter, PANW sees an adjusted EPS of $2.03 to $2.06, somewhere in line with the estimate of $2.04. Revenue is seen in the range of $1.54 billion to $1.56 billion, slightly better than the consensus of $1.54 billion.

For the full year, the company is aiming for EPS between $9.40 and $9.50 to top the $9.30 estimate. Revenue is seen at between $6.85 billion and $6.9 billion, again better than the estimate of $6.76 billion.

Palo Alto also declared a 3-for-1 stock split.

A Barclays analyst hiked the price target to $695 per share from $605.

“With FCF estimates going up and GAAP profitability happening earlier than expected, we believe PANW remains a long term investable name particularly in this backdrop,” he said in a client note.

A Citi analyst said PANW delivered “across-the-board robust growth KPIs.” The analyst hiked the price target to $640 from $605.

She has especially praised PANW’s “flawless sales execution.”

“We also see this “drama-free” print elevating expectations for remaining off-cycle reporters, and particularly ZS, where PANW’s disproportionately bullish SASE comments (lighthouse wins, large deal, new logo momentum) likely stoke further competitive fears,” she wrote in a client note.