Shares of cybersecurity firm Palo Alto Networks (PANW) finished up in today’s trading as investors await its Q2 earnings results on February 13 after the market closes. Analysts are expecting earnings per share to come in at $0.78 on revenue of $2.24 billion. According to TipRanks’ data, this equates to 6.8% and 13.4% year-over-year increases, respectively.
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Ideally, earnings per share should grow faster than revenue as that would demonstrate a high degree of operating and financial leverage in the business. Nevertheless, it’s worth noting that Palo Alto has beaten earnings estimates every quarter since its 2020 Q4. Therefore, it’s possible that EPS growth can still outpace revenue growth.
In addition, there is good reason to believe that this streak of earnings beats will continue, at least according to four-star Analyst Patrick Colville at Scotiabank. Indeed, the firm’s forensic analysis suggests that there will be earnings surprises and estimate revisions for software. As a result, Colville raised his price target to $225, up from $200, and is keeping his Buy rating on the stock.
Options Traders Anticipate a Large Move
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you. Indeed, it currently says that options traders are expecting a large 8.1% move in either direction.
What Is the Price Target for PANW?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on PANW stock based on 29 Buys, six Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 5.6% rally in its share price over the past year, the average PANW price target of $211.27 per share implies 7.6% upside potential.
