Shares of cybersecurity provider Palo Alto Networks (PANW) have performed quite well, gaining 218% over the past five years.
The momentum continues. Since the company’s earnings announcement on August 23, the stock has gained over 20%, to close at $447.05 per share on Wednesday.
I am bullish on the stock as the world moves toward digitization, increasing demand for cybersecurity solutions. (See Palo Alto Dividend Date and History on TipRanks)
So, Let’s Review Palo Alto’s Results
Palo Alto announced quarterly net revenues of $1.2 billion, up 28% year-over-year and exceeding the $1.17 billion consensus projection. In addition, billings increased by 34% from the year-ago quarter to $1.9 billion.
Furthermore, earnings per share increased by 8% year over year to $1.60, exceeding the consensus forecast of $1.44.
This growth, according to Palo Alto, is likely to continue. Its optimism can be observed in the strong guidance offered by management.
Encouraging Guidance
For fiscal Q1, management predicts revenue to come in the range of $1.19 – $1.21 billion, which is better than the Street’s forecasts of $1.15 billion. The guidance indicates a growth of 26%-28% on a year-over-year basis.
For the full-year 2022, revenue is expected in the range of $5.275 – $5.325 billion, which implies year-over-year growth of 24%-25%.
Growth Drivers
Given the remote-working trend and the increased demand for greater security, Palo Alto’s next-generation security platforms witnessed strong adoption during the quarter.
The company witnessed an increase in corporate cybersecurity expenditure, due to many companies’ interest in avoiding costly ransomware attacks. As a result, the company saw a surge in significant customer transactions across all of its offerings, resulting in increased revenue.
Furthermore, Palo Alto benefited from the purchase of Bridgecrew, which is the foundation of the Prisma public cloud. Prisma had a strong fourth-quarter performance, which helped to boost bookings.
What are the Analysts Saying?
Impressed with PANW’s Q4 results and strong guidance, Truist analyst Joel Fishbein reiterated a Buy rating on the stock, but increased the price target to $475.00 from $425.00. This implies 6.3% upside potential to current levels.
The analyst believes that a number of factors contributed to the positive results, including outstanding execution, a strong product portfolio, work-from-home benefits, and sustained success in next-generation security solutions.
Another analyst, Tal Liani of Bank of America Securities, reiterated a Buy rating on the stock, with a price target of $445. This implies that shares are fully valued at current levels.
Liani said, “We favor PANW’s technological and product leadership, which should help to support share gains and solidify Palo Alto as a cyber security leader longer-term.”
Wall Street’s Take
Palo Alto stock commands a Strong Buy consensus rating, based on 23 Buys and 2 Holds.
As for price targets, the average Palo Alto price target is $480.16 per share, implying around 7.4% upside potential from current levels.
Further, the stock’s TipRanks financial blogger opinions metric, which is based on 17 Blogger Opinions, indicates that 100% of the analysts are bullish on PANW, compared to a sector average of 71%.
Disclosure: At the time of publication, Shalu Saraf did not have a position in any of the securities mentioned in this article.
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