Needham & Company Reiterates Hold on Palo Alto Networks (PANW) following 4Q Beat and Guide

August 31, 2016 8:21 AM EDT
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Price: $126.66 -2.28%

Rating Summary:
    40 Buy, 10 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 11 | Down: 31 | New: 42
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Needham & Company reiterated a Hold rating on Palo Alto Networks (NYSE: PANW) following the company's 4Q earnings report. PANW revenue and billings of $400.8m and $572.4m were above consensus $389.9m and $559.5m respectively. Management released 1Q guidance of $396-402m is below consensus of $402m at the midpoint, while EPS of $0.51-0.53 is below consensus of $0.56.

Analyst Scott Zeller commented, "We believe PANW's +45% y/y billings demonstrates this large-cap security player is best-in-class. Consistent with Needham’s recent commentary on the security space, PANW said the largest players in security are getting more share-of-wallet, and point solutions are under pressure. That said, the +45% billings growth is a material deceleration from the most recent three quarters, which were all in the +61-62% range y/y. The outlook for FY17 was light for F1Q, but in line on FY17 revenues and above on EPS, largely due to an accounting benefit for expensing commissions, which adds roughly $0.25 EPS to the year. PANW is clearly best-in-class, according to our field discussions, yet shares are trading -5% in aftermarket near $136, which is 5.3x EV/CY17 revenue and 16x EV/FCF FY17, which we believe is near fair value. Maintain HOLD."

For an analyst ratings summary and ratings history on Palo Alto Networks click here. For more ratings news on Palo Alto Networks click here.

Shares of Palo Alto Networks closed at $143.45 yesterday.



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