Palo Alto Stock Falls; Earnings guide meets expectations

Palo Alto Networks (PANW) on Monday reported fiscal second quarter earnings and earnings that beat analyst estimates. But Palo Alto shares fell, even as April quarter revenue and billing guidance exceeded Wall Street targets.


Amid high expectations, Palo Alto’s earnings for the January quarter were $ 1.55 per share, up 30% from the same period last year. Revenue increased 25% to $ 1.02 billion, the company said. Revenue increased 22% to $ 1.2 billion versus estimates of $ 1.18 billion.

Analysts had expected Palo Alto earnings of $ 1.43 a share on sales of $ 986 million for the period ending January 31. A year earlier, Palo Alto’s earnings were $ 1.19 per share on sales of $ 817 million.

Product revenue increased 3% to $ 254.7 million, while subscription revenue increased 34% to $ 762.2 million, Palo Alto said.

Palo Alto shares fell 4.3% to about 368 in extended trading on the stock market today.

Palo Alto earnings guide disappoints

For the current quarter ending in April, Palo Alto expects earnings of $ 1.28 per share at the midpoint of its guidance, with revenues in the range of $ 1.05 billion to $ 1.06 billion. Analysts had estimated earnings of $ 1.28 per share on revenue of $ 1.05 billion. Palo Alto forecast a turnover of $ 1.23 billion versus analyst estimates of $ 1.22 billion.

Cybersecurity stocks headed to the earnings report with an entry point of 375.10. A 5% buy zone extends to 393.86.

Palo Alto shares have an IBD relative strength rating of just 77 out of a possible 99. PANW shares broke from double base in October.

Firewall devices protect computer networks by blocking online intrusions and monitoring web-based applications

In June 2018, Palo Alto hired a new CEO to make strategic changes. The new CEO, Nikesh Arora, was a former senior executive of Alphabet(GOOGL) from Google and SoftBank Group. Arora embarked on a wave of acquisitions to build a broad cloud-based platform under the “Prisma” brand.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless technology, artificial intelligence, cybersecurity and cloud computing.


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