BTIG Trims PT on Palo Alto Networks (PANW) to $190 Following Q1 Results, Outlook; Affirms at 'Buy'

November 22, 2016 7:20 AM EST
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Price: $138.45 --0%

Rating Summary:
    40 Buy, 10 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 9 | Down: 12 | New: 44
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BTIG lowers its price target on Buy-rated Palo Alto Networks (NYSE: PANW) from $210 to $190 following Q1 results and guidance issued Monday night.

The firm noted the following today:

  • Larger deals a blessing and a curse near term. Revenues and billings came in below expectations, due primarily to a handful of large, complex deals that slipped into the current quarter (management indicated that a majority have already closed). On the one hand, larger deals are a sign of customers’ confidence in Palo Alto’s platform. However, the added complexity and decision making associated with large enterprise deals elongate the traditional sales cycle and disrupt near-term momentum. Long term though, we remain positive as customer lifetime value can triple within two years of joining the platform. This dynamic speaks to the breadth of the opportunity.
  • Competitive environment is unchanged, FCF story remains intact. Despite other vendors attributing shortfalls to changing competitive dynamics within the security space, Palo Alto affirmed that their competitive environment remains unchanged. In addition, the EPS and margin framework remains intact (albeit partially aided by an accounting change). We still expect >30% billings growth for the year, and the company maintains a best in class FCF of >40%.

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