Palo Alto Networks Reports Strong Q1 Results; Street Says Buy

Cybersecurity major Palo Alto Networks, Inc. (PANW) has reported better-than-expected results for the fiscal first quarter ended October 31, 2021. Following the results, shares of the company gained 2.3% to close at $532 in Thursday’s extended trading session.

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Revenue & Earnings

Quarterly revenues of $1.2 billion grew 32% year-over-year, in line with the consensus estimate. Both product revenues, and subscription and support revenues increased 24.5% and 34.3%, respectively, from the previous year and contributed to the overall growth in revenues.

The company reported quarterly earnings per share (EPS) of $1.64, up 1.2% year-over-year. Moreover, the figure surpassed the consensus estimate of $1.57 per share.

Other Operating Metrics

The company’s fiscal first-quarter billings witnessed a growth of 28% from the prior year to $1.4 billion, while the remaining performance obligation grew 37% to $6 billion in the same period.

Outlook

The company also provided guidance for the fiscal second quarter, along with Fiscal Year 2022.

For the fiscal second quarter, the company forecasts revenue to be in the range of $1.265 billion to $1.285 billion against the consensus estimate of $1.27 billion. The company expects to post earnings in the range of $1.63 per share to $1.66 per share. The consensus estimate for the same is pegged at $1.64 per share.

Similarly, for Fiscal Year 2022, while the company expects revenue to hover between $5.35 billion and $5.40 billion, the consensus estimate for the same stands at $5.31 billion. The company forecasts earnings in the range of $7.15 per share and $7.25 per share. The consensus estimate for the same stands at $7.24 per share.

Management Commentary

The CEO of Palo Alto Networks, Nikesh Arora, said, “We continue to see strong customer demand and have continued to release key innovations which give us confidence in the durable growth we presented at our September Analyst Day.”

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Price Target

Recently, Mizuho Securities analyst Gregg Moskowitz reiterated a Buy rating on the stock. The analyst, however, raised the price target from $560 to $625, which implies upside potential of 20.2% from current levels.

Consensus among analysts is a Strong Buy based on 23 Buys and 3 Holds. The average Palo Alto Networks price target of $554.04 implies upside potential of 6.6% from current levels.

Smart Score

Palo Alto Networks scores an 8 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock is likely to outperform market expectations. Shares have gained 80.9% over the past year.