Needham & Company Reiterates Hold on Palo Alto Networks (PANW) following 4Q Beat and Guide
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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."
Shares of Palo Alto Networks closed at $143.45 yesterday.
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