Palo Alto Stock Falls As Cybersecurity Firm’s Earnings Guidance Meets Expectations

Palo Alto Networks (PANW) reported fiscal second-quarter earnings and revenue Monday that topped analyst estimates. But Palo Alto stock fell, even as April quarter revenue and billings guidance edged by Wall Street targets.


Amid high expectations, Palo Alto earnings for the January quarter came in at $1.55 a share, up 30% from the year-earlier period. Revenue rose 25% to $1.02 billion, the company said. Billings increased 22% to $1.2 billion vs. estimates of $1.18 billion.

Analysts expected Palo Alto earnings of $1.43 a share on sales of $986 million for the period ended Jan. 31. A year earlier, Palo Alto earnings were $1.19 a share on sales of $817 million.

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

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

Palo Alto Earnings Guidance Disappoints

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

The cybersecurity stock headed into the earnings report with an entry point of 375.10. A 5% buy zone extends to 393.86.

Palo Alto stock owns an IBD Relative Strength Rating of only 77 out of a possible 99. PANW stock broke out from a double-bottom base in October.

Firewall appliances protect computer networks by blocking online intrusions and monitoring web-based apps

In June 2018, Palo Alto brought in a new chief executive to make strategic changes. The new CEO, Nikesh Arora, was a former top executive at Alphabet‘s (GOOGL) Google and SoftBank Group. Arora embarked on an acquisition spree to build a broad, cloud-based platform branded “Prisma.”

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


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