- Wednesday, October 16, 2024
Palo Alto Networks stock has been rising in anticipation of the security software company's upcoming earnings report for the October quarter. Analysts are showing optimism, publishing positive notes on the stock.
Since Palo Alto last disclosed its results in August, the stock has seen a 22% increase. Initially, concerns were raised due to the unusual timing of the announcement, which was made on a Friday afternoon. However, the news turned out to be better than expected, and the stock rebounded.
Analysts are now more upbeat about the outlook for Palo Alto Networks. They believe that the results for the fiscal first quarter will surpass both management's expectations and Wall Street consensus estimates.
This week's report, set to be released after trading hours on Wednesday, will provide insights into the overall outlook for corporate IT spending and security software. With few other technology earnings announcements this week, all eyes will be on Palo Alto Networks. It comes at a time when rival company Fortinet reported disappointing financial results, highlighting weakness in demand from retail and telecom service providers along with softer sales in firewall products.
RBC Capital analyst Matthew Hedberg expressed his optimism in a research note on Monday. He stated that he expects slightly better results based on positive channel checks, particularly from the federal government and financial services markets. Hedberg continues to rate the stock as an "Outperform" with a target price of $281, highlighting it as a top pick.
As of Monday morning, the stock was up 0.9% at $255.88.
Palo Alto Networks Expects Strong Quarter Amidst Mixed Analyst Views
Wedbush analyst Dan Ives anticipates a robust quarter for Palo Alto Networks, citing strong deal activity across the board. He believes that the federal sector could be a standout performer during this period. Ives, who maintains an Outperform rating and a $290 price target, continues to rank Palo Alto Networks as one of his favorite cybersecurity stocks.
However, Guggenheim analyst John DiFucci takes a more cautious approach, maintaining a Neutral rating. DiFucci's field checks yielded mixed results, indicating that enterprise spending declined throughout October following a strong September driven by the government sector. Nevertheless, DiFucci believes that Palo Alto Networks will surpass consensus estimates for the October quarter and may potentially raise its financial guidance for the fiscal year ending July 2024.
Palo Alto Networks has projected quarterly revenue ranging from $1.82 billion to $1.85 billion, reflecting a 16% to 18% increase, with an adjusted profit of $1.15 to $1.17 per share. The company also expects billings of $2.05 billion to $2.08 billion, representing a 17% to 19% growth rate. According to FactSet analysts, the consensus forecast for this quarter includes revenue of $1.844 billion, profit of $1.16 per share, and billings of $2.07 billion.
Looking ahead to the fiscal year ending July 2024, Palo Alto Networks predicts revenue between $8.15 billion and $8.20 billion, with an adjusted profit ranging from $5.27 to $5.40 per share. Additionally, billings are expected to reach $10.9 billion to $11 billion, marking a 19% to 20% increase. The Street consensus stands at $8.19 billion in revenue, a profit of $5.32 per share, and billings of $10.96 billion.
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