Cybersecurity company Palo Alto Networks (NASDAQ:PANW) will release its second quarter Fiscal 2024 results after the market closes on Tuesday, February 20. While the stock has gained nearly 120% over the past year, Wall Street analysts maintain a bullish outlook ahead of Q2 earnings.
Strong demand for cyber security offerings, investments in product and building sales capability, and operating efficiency will likely support its top and bottom lines in the second quarter.
Analysts Remain Upbeat
On February 15, Robert W. Baird analyst Shrenik Kothari reiterated a Buy rating on PANW stock. Despite tough year-over-year comparisons, Kothari said that Palo Alto could top Q2 expectations. Stable pricing and rising product demand will likely support the company’s billings and financials.
Echoing similar sentiments, Jefferies analyst Joseph Gallo maintained a Buy on PANW stock. In a note to investors dated February 13, the analyst said that the company’s annualized recurring revenue (ARR) and billings could exceed consensus estimates for Q2. The analyst expects Palo Alto to capitalize on the consolidation in the cybersecurity market and believes that the stock’s premium valuation is justified.
PANW: Q2 Expectations
Wall Street expects Palo Alto to report sales of $1.97 billion in Q2, up 18.7% year-over-year. This is within the management’s guidance range of $1.955 billion to $1.985 billion. The company expects second-quarter billings to be in the range of $2.335 billion to $2.385 billion, reflecting a year-over-year increase of 15% to 18%.
Thanks to strong sales and operating efficiency, PANW expects its adjusted EPS to be in the range of $1.29 to $1.31, up 23% to 25%. In comparison, analysts expect the company to report EPS of $1.3, reflecting a year-over-year increase of 23.8%.
What is the Future of PANW?
Analysts are upbeat about the future of PANW stock. With 26 Buy and three Hold recommendations, Palo Alto stock has a Strong Buy consensus rating. However, due to the rally in its shares, analysts’ average price target of $387.93 implies a limited upside potential of 5.87%.
Insights from Options Trading Activity
It’s worth noting that options traders are pricing in a +/- 10.19% move in PANW stock on earnings, greater than the previous quarter’s earnings-related move of -5.42%.
The anticipated move is determined by computing the at-the-money straddle of the options closest to the expiration after the earnings announcement.
Learn more about TipRanks’ Options tool here.
Bottom Line
Palo Alto stock has appreciated quite a lot on the back of solid demand and growing ARR. Despite the notable increase in its share price, analysts are upbeat about PANW stock and expect the company to deliver solid Q2 sales and earnings.
