Palo Alto Networks Inc (PANW) Shares Sink on Disappointing Earnings and Guidance


Investors weren’t impressed with Palo Alto Networks Inc (NYSE:PANW) earnings report, sending shares of the security software giant down by nearly 18% in after-hours trading.

For its fiscal second quarter, Palo Alto reported adjusted diluted earnings per share (EPS) of $0.63 on revenue of $422.6 million, compared to consensus estimates of 62 cents a share on sales of $430 million.

In addition, Palo Alto forecast 54 cents to 56 cents in adjusted earnings per share on revenue of $406 million to $416 million for the current quarter, below analyst expectations of 70 cents a share on sales of $455 million.

CEO Mark McLaughlin acknowledged execution issues saying, “While fiscal second quarter revenue of $423 million was yet another record for the company, we were disappointed that we came in below top-line expectations due to some execution challenges, which we are moving quickly to address.”

Just before the earnings announcement, Odeon analyst Jahanara Nissar warned, “There is a LOT of caution out there and rightfully so as the Co. has lowered consecutively for the past 3 quarters and it’s erratic trading pattern has many unwilling to touch it here. Another guide lower would not be surprising. The broader tape in tech doesn’t help either.”

On the ratings front, PANW has been the subject of a number of recent research reports. In a report released yesterday, BMO analyst Keith Bachman reiterated a Hold rating on PANW, with a price target of $160, which represents a slight upside potential from current levels. Separately, on the same day, Baird’s Jayson Noland reiterated a Buy rating on the stock.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Keith Bachman and Jayson Noland have a yearly average return of 11.7% and 7.6% respectively. Bachman has a success rate of 64% and is ranked #253 out of 4504 analysts, while Noland has a success rate of 53% and is ranked #943.

Sentiment on the street is mostly bullish on PANW stock. Out of 12 analysts who cover the stock, eight suggest a Buy rating , three suggest a Hold and one recommends to Sell the stock. The 12-month average price target assigned to the stock is $168.67, which implies an upside of 10% from current levels.

Palo Alto Networks, Inc. engages in the provision of network security solutions. It offers network security functions which include threat protection, firewall, intrusion detection system, intrusion prevention system and uniform resource locator filtering.