Palo Alto Soars 10% on Robust Q4 Results & Upbeat FY22 Guidance

Global cybersecurity provider Palo Alto Networks, Inc. (PANW) delivered robust fourth-quarter and full-year 2021 results driven by strength in large customer transactions across all of its offerings. Shares jumped 10.4% on the news in the extended trading session on August 23.

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The company reported adjusted earnings of $1.60 per share, an increase of 8% compared to the prior-year period, and also outpaced analysts’ estimates of $1.44 per share.

To add to that, revenue for the quarter climbed 28% year-over-year to $1.22 billion and surpassed the Street’s estimate of $1.17 billion.

For the full year 2021, Palo Alto reported revenue of $4.26 billion, up 25% year-over-year and adjusted earnings grew 25.8% to $6.14 per share.

Markedly, compared to the year-ago period, the company’s fourth-quarter billings grew 34% to $1.9 billion, and annual billings grew 27% to $5.5 billion.

Additionally, compared to the prior-year period, deferred revenue grew 32% to $5 billion and the company’s remaining performance obligations (RPO) increased 36% to $5.9 billion. (See Palo Alto Networks stock charts on TipRanks)

Commenting on the results, Nikesh Arora, Chairman and CEO of the company, said, “Our strong Q4 performance was the culmination of executing on our strategy throughout the year, including product innovation, platform integration, business model transformation, and investments in our go-to-market organization.”

Based on its view of current market conditions, PANW guided for first-quarter adjusted earnings to fall in the range of $1.55 – $1.58 per share, compared to the consensus estimate of $1.60 per share.

Moreover, Q1 revenue is forecast in the range of $1.19 – $1.21 billion compared to the Street’s forecasts of $1.15 billion.

For the full-year 2022, the company projects revenue and earnings to be in the range of $5.275 – $5.325 billion and $7.15 – $7.25 per share, respectively. The consensus estimate for revenue and earnings is pegged at $4.98 billion and $7.09 per share, respectively.

Impressed with PANW’s better-than-expected results and upbeat guidance, Cowen & Co. analyst Shaul Eyal lifted the price target on the stock to $475 (27.5% upside potential) from $425, while maintaining a Buy rating.

Eyal said, “We believe recent concerns should be alleviated given the strong performance and guidance as well as consistent execution levels in recent quarters. PANW’s analyst day scheduled for 9/13 is likely to provide longer-term goals and shed more light on the healthy underlying trends supporting the strong results.”

The analyst’s optimistic view on the company is predicated on PANW’s next-gen firewalls (NGFW) continuing to take a share of the enterprise security equipment market, significant cross-sell opportunities with expansion into cloud security and security operations, and strong M&A execution and integration.

Overall, the stock commands a Strong Buy consensus rating based on 11 Buys and 1 Hold. The average Palo Alto Networks price target of $451.42 implies 21.2% upside potential to current levels. Shares have gained 39.5% over the past year.