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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.




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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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