Oppenheimer Ups Palo Alto Networks (PANW) PT to $196 After Beating Earnings...Again
Bucking the trend of trading off after earnings as many data security companies have, Palo Alto Networks (NYSE: PANW) posted another consensus beating quarter. Revenue of $297.2M (up 55% YoY) beat the consensus estimate of $284.5M, and EPS of $0.35 beat consensus by $0.03. PANW is benefiting from strong adoption of new products and subscriptions (high and mid-range appliances, WildFire and Traps) and ongoing uptake across many verticals.
Product revenue totaled $147.7M (up 45.6% YoY) driven by strong demand for both high and mid-range appliances. Service revenue (includes recurring SaaS & maintenance) grew 64.5% YoY to $149.5M. Operating margins expanded to 16.7% from 10.6% in F1Q15.
PANW's growing number of large transactions, including several seven-digit deals, is among the factors fueling billing growth of 61% YoY to $388M. Additionally, cash from operations at $146.7M bested Street's estimates of $133M essentially doubling YoY.
PANW guided F2Q16 to EPS of $0.38-0.39 on revenue of $314-318M.
Oppenheimer analyst, Shaul Eyal said in an earnings review note, " PANW continues to gain market share while further expanding margin as it scales. Its comprehensive platform approach (appliances, endpoint, analytics and APT) is well received by its customers generating stellar outperformance." He raised his PT to $196 (9.1X EV/FY17E revenue) with no change to the Outperform rating.
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Shares of Palo Alto Networks closed at $172.02 yesterday.