Needham & Company Remains Sidelined on Palo Alto Networks (PANW) Following Mixed Quarter
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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."
Shares of Palo Alto Networks closed at $161.06 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst EPS View
Related EntitiesNeedham & Company, Earnings
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