As the earnings season roller coaster continues to move, analysts are weighing in on security software giant Palo Alto Networks Inc (NYSE:PANW) and e-commerce firm Etsy Inc (NASDAQ:ETSY). Both stocks got hammered today following earnings releases that failed to impress investors to say the least. Let’s take a closer look:
Palo Alto Networks Inc
Palo Alto shares are falling over 20% in Wednesday’s trading session after the company reported a disappointing second quarter as the company pointed to poor execution from its sales teams which were impacted by restructuring at the beginning of the year.
In reaction, Oppenheimer analyst Shaul Eyal reduced his price target for PANW from $184 to $173, while reiterating an Outperform rating on the stock.
Eyal noted, “Discouraged by PANW’s disappointing results but believe its “recalibration” headwinds are reversible. The dip (-20%) could be an interesting buying opportunity for LT investors reflecting 11.6x FY18 FCF.”
“We lower our F3Q16 revenue/EPS estimate to $411M/$0.55 from $444M/$0.73. PANW guided FY17 revenue to +25% YoY and EPS to $2.45-2.50. Our FY17 revenue/EPS is adjusted to $1.72B/$2.48 from $1.80B/$2.78. Our FY18revenue/EPS is lowered to $2.13B/$3.53 from $2.29B/$3.66. We introduce our FY19 revenue/EPS estimates of $2.6B (+22.7% YoY)/$4.77,” the analyst added.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Shaul Eyal has a yearly average return of 10.6% and a 63% success rate. Eyal has a 19.2% average return when recommending PANW, and is ranked #112 out of 4503 analysts.
Out of the 19 analysts polled in the past 3 months, 10 rate Palo Alto stock a Buy, 8 rate the stock a Hold and 1 recommends to Sell. With a return potential of 28%, the stock’s consensus target price stands at $151.85.
Etsy shares are down nearly 13%, as of this writing, after the company posted a solid fourth-quarter results, but discussed increases in marketing expenses and Product costs (from Blackbird), which will put pressure on near-term margins.
As such, Roth Capital analyst Darren Aftahi cut his price target for ETSY to $13.50, down from $15.75, while reiterating a Buy rating on the stock. The new price target represents a potential upside of 28% from where the stock is currently trading.
Aftahi commented, “ETSY reported another Q of financial upside in 4Q. However its FY17 guidance included ~$20M of brand marketing ($14M incremental), which adversely impacts our EBITDA projection. Aside from that, we believe the long-term story remains intact with potential optionality from Etsy Studio, which could be a derivative craft marketplace growth story for ETSY.”
“Our adj. EBITDA reduces significantly on increased brand marketing spend. However, we expect leverage in the model to continue as it held exit rates for FY18 EBITDA margins “in the high teens”,”the analyst added
According to TipRanks, analyst Darren Aftahi has a yearly average return of -2.8% and a 43% success rate. Aftahi has a -17.6% average return when recommending ETSY, and is ranked #3984 out of 4503 analysts.
Out of the 6 analysts polled in the past 3 months, 2 rate Etsy stock a Buy, while 4 rate the stock a Hold. With a return potential of 38%, the stock’s consensus target price stands at $14.50.