Palo Alto Networks is scheduled to report its earnings after the close of trading on Wednesday.
David Paul Morris/Bloomberg
Palo Alto Networks
stock is inching higher ahead of the security software company’s October quarter earnings report. Analysts published a flurry of bullish notes on Monday.
The stock is up 22% since Palo Alto last disclosed its results, on a Friday afternoon in August. Concern that that unusual timing might be a negative sign depressed the stock ahead of the numbers, though the news didn’t turn out to be negative.
Heading into this week’s report, which is due after the close of trading on Wednesday, analysts are generally more upbeat about the outlook for Palo Alto Networks (ticker: PANW). They expect the results for the fiscal first quarter will exceed both management’s forecasts and Wall Street consensus estimates.
The report, coming in a relatively light week for technology earnings announcements, should shed light on both the outlook for corporate IT spending generally, and for security software in particular. The results will come less than two weeks after disappointing financial results from rival
Fortinet
(FTNT), which cited weakness in demand from the retail and telecom service provider segments, as well as cyclical softness in firewall sales.
RBC Capital analyst Matthew Hedberg said in a research note Monday that he sees “slight upside” to results given favorable channel checks, including “strong feedback” from both the federal government and financial services markets. Hedberg kept an Outperform rating and $281 price target on the stock, which he designates as a “top pick.”
The stock was 0.9% higher at $255.88 on Monday morning.
Likewise, Wedbush analyst Dan Ives expects a “solid quarter,” saying his checks point to strong deal activity across the board. Activity in the federal sector “could be a shining star” for the company in the quarter, he predicted. Palo Alto Networks remains one of Wedbush’s favorite cybersecurity stocks, Ives said, keeping his Outperform rating and $290 price target.
Guggenheim analyst John DiFucci is more cautious, keeping a Neutral rating. He said his field checks were “mixed,” asserting that while the company had a strong September driven by the government sector, “enterprise spending generally faded throughout the month of October.” DiFucci nonetheless thinks Palo Alto Networks should beat consensus estimates for the October quarter, and could raise its financial guidance for the July 2024 fiscal year.
For the quarter, Palo Alto Networks has projected revenue of between $1.82 billion and $1.85 billion, up 16% to 18%, with adjusted profit of $1.15 to $1.17 a share. The company sees billings of $2.05 billion to $2.08 billion, up 17% to 19%. The consensus forecasts among analysts tracked by
FactSet
call for revenue of $1.844 billion, profit of $1.16 a share, and billings of $2.07 billion.
The company’s current guidance for the July 2024 fiscal year calls for revenue of $8.15 billion to $8.20 billion, with adjusted profit of $5.27 to $5.40 a share, and billings of $10.9 billion to $11 billion, up between 19% and 20%. The Street consensus is for $8.19 billion in revenue, profit of $5.32 a share, and billings of $10.96 billion.
Write to Eric J. Savitz at [email protected]
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