Palo Alto Networks Beats Q2 Expectations; Shares Up 6.4%

Palo Alto Networks Inc. (PANW) reported better than expected second quarter and fiscal year 2022 results, beating both earnings and revenue estimates. The news pushed the shares up 6.4% during the extended trading session, after ending the day down 1.4% at $475.51 on February 22.

Palo Alto is a multinational cybersecurity company offering network security solutions to enterprises, service providers, and government entities. PANW stock has lost 12.6% year-to-date and registered a gain of 31.8% over the past year.

Better-Than-Expected Q2 Results

Palo Alto Networks’ total revenue advanced 30% year-over-year to $1.3 billion and came in marginally better than analyst estimates of $1.28 billion.

Total billings for the quarter increased 32% year-over-year to $1.6 billion and Remaining Performance Obligation (RPO) advanced 36% to $6.3 billion.

Moreover, adjusted earnings of $1.74 per share grew 12.3% year-over-year and also meaningfully surpassed analyst estimates of $1.64 per share.

Company Comments

Chairman and CEO of PANW , Nikesh Arora, said, “In Q2, our company continued to benefit from strength across our three security platforms, driven by strong cybersecurity demand, organizations architecting for hybrid work and growing their hyperscale cloud footprints.”

“On the back of this strength, notably in our next generation security offerings, we are raising our guidance for the year across revenue, billings, and earnings per share,” Arora concluded.

Upbeat Guidance

Based on the strong demand for its offerings on the heels of accelerated digital transformation, PANW guided for Q3 revenue to be between $1.345 and $1.365 billion, and adjusted earnings to be between $1.65 and $1.68 per share. The consensus estimates for revenue and earnings are pegged at $1.35 billion and $1.63 per share respectively.

For FY22, the company increased its guidance and now expects total revenue to fall in the range of $5.425 billion to $5.475 billion, compared to the consensus of $5.39 billion. Similarly, FY22 adjusted earnings are projected to be between $7.23 and $7.30 per share, in-line with the consensus of $7.23 per share.  

Price Target

The Wall Street community has awarded the PANW stock a Strong Buy consensus rating with 10 unanimous Buys. At the time of writing, the average Palo Alto Networks price target of $630 implies 32.68% upside potential to current levels.

Stock Investors

TipRanks’ Stock Investors tool shows that investor sentiment is currently Very Positive on Palo Alto Networks, with 9.6% of portfolios tracked by TipRanks increasing their exposure to PANW stock over the past 30 days.

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