Earnings Insights: FBR Analysts Shine Light on Palo Alto Networks Inc (PANW) and Ballard Power Systems Inc. (USA) (BLDP)

There has been a lot of action on Wall Street this week with new earnings reports and events. Find out the latest analyst news on Cybersecurity firm Palo Alto Networks Inc (NYSE:PANW) and fuel cell company Ballard Power Systems Inc. (USA) (NASDAQ:BLDP).

Palo Alto Networks Inc

In a research report issued today, FBR analyst Samad Samana reiterated an Outperform rating on shares of Palo Alto Networks, while raising the price target to $170 (from $160), after the company reported fiscal second-quarter results that beat Street expectations across the board.

Samana observed, “The strong quarter shows that the company’s multiple product cycles and the secular cybersecurity tailwinds are robust enough to support white-hot growth even in a more competitive environment and a choppier macro backdrop. We would highlight the ramp of Wildfire, Traps, and the PA-7050/7080 chassis as key contributors to the top-line upside. With a strong tailwind behind it, the company was also able to guide above consensus revenue for F3Q. However, a higher adoption rate than expected for services is impacting the near-term trajectory for margin expansion (revenue is recognized ratably, but commissions are expensed fully upfront).”

“Consequently, PANW revised down its margin outlook exiting the year. We believe this is a natural occurrence in a hybrid-SaaS model, and the benefits can already be seen in deferred revenue and cash flow growth. In our opinion, PANW will continue to benefit from the combination of strong product cycles, differentiated technology, and secular tailwinds over the coming quarters, which should drive healthy growth and margin expansion,” the analyst continued.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Samad Samana has a yearly average return of -12.8% and a 23.1% success rate. Samana is ranked #3359 out of 3675 analysts.

Out of the 22 analysts polled by TipRanks, 20 rate Palo Alto stock a Buy, while 2 rate the stock a Hold. With a return potential of 30%, the stock’s consensus target price stands at $198.88.

Ballard Power Systems Inc. (USA)

In addition, FBR analyst Carter Driscoll reiterated a Market Perform rating on shares of Ballard Power Systems, with a price target of $1.50, after the company reported fourth-quarter results, where the pipeline and order book climbed to record levels, but revenue production fell short.

Driscoll opined, “While Ballard does not provide formal guidance due to the lumpy timing of orders, management expects to grow revenue, increase the gross margin, and cut operating costs in 2016. As anticipated, Ballard is reviewing its backup power segment, and we now expect the company to exit the business. We expect China-based heavy-duty (HD) motive wins (bus and tram), a full-year contribution from Protonex (portable power management products), and growth in technology solutions to drive ~46% YOY revenue growth in 2016, but expect a heavily back-halfloaded year. Ballard’s $58M order book is the largest in its history and up significantly YOY, although it is difficult to see how the company materially outperforms our expectations absent an additional, unexpected win in HD motive.”

According to TipRanks.com, analyst Carter Driscoll has a yearly average return of -18.2% and a 22.0% success rate. Driscoll has a -34.6% average return when recommending BLDP, and is ranked #3543 out of 3675 analysts.

Out of the 4 analysts polled by TipRanks, 3 rate Ballard Power stock a Hold, while 1 rates the stock a Buy. With a return potential of 29.5%, the stock’s consensus target price stands at $1.80.

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