Needham & Company Remains Sidelined on Palo Alto Networks (PANW) Following Mixed Quarter

November 22, 2016 7:19 AM EST
Get Alerts PANW Hot Sheet
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 1Q earnings report. PANW’s $398.1m revenues and $517m billings were below the consensus estimates of $400m revenue and $525m billings. EPS of $0.55 was better than $0.52 consensus. Management guided 2Q to $426-432m and $0.61-0.63 EPS, which is below consensus $439m and $0.63 EPS.

Analyst Scott Zeller commented, "The PANW F1Q17 (Oct) was a rare miss on revenue and billings, although EPS was above consensus. The overall cooling of the security software market has caught up with PANW; last quarter saw a marked deceleration in billings, and this quarter was a miss and guide-down. The simple explanation in our field discussions is that PANW is still getting the large deals – however, the urgency of 1-1.5 yrs ago to sign off on 7-figure deals has changed, and sales cycles are lengthening. PANW management validated this view in their comments. While we believe PANW is best in class for platform/large cap network security, we view valuation as rangebound; shares indicated down -12% to $141, which is 5x EV/FY18 revenue and 16x EV/FCF’17, which we believe is near fair value for a decelerating large cap with 30% revenue growth. 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 $161.06 yesterday.



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