Palo Alto Networks (PANW) Surges on Strong Guidance, Accelerating Growth Prompts Analysts to Raise PTs Including a New Street-High from Morgan Stanley
Shares of Palo Alto Networks (NYSE: PANW) are trading over 11% higher in early Tuesday trading after the company reported stronger-than-expected FQ4 results and guidance.
Palo Alto Networks reported Q4 EPS of $1.60, $0.16 better than the analyst estimate of $1.44. Revenue for the quarter came in at $1.2 billion versus the consensus estimate of $1.17 billion.
"Our strong Q4 performance was the culmination of executing on our strategy throughout the year, including product innovation, platform integration, business model transformation and investments in our go-to-market organization," said Nikesh Arora, chairman and CEO of Palo Alto Networks.
Arora added that the company witnessed “notable strength in large customer transactions with strategic commitments across our Strata, Prisma and Cortex platforms."
Shares were especially boosted by a strong outlook offered by the company. PANW expects Q1 2022 EPS of $1.55-$1.58, which is slightly lower than the consensus of $1.60. However, Q1 2022 revenue is projected at $1.2 billion at the midpoint of the guidance, higher than the consensus of $1.15 billion.
FY2022 EPS is seen between $7.15 and $7.25 on revenue of $5.275-5.325 billion. Both are higher than EPS of $7.09 on sales of $4.98 billion projected by surveyed market analysts.
As expected, multiple research firms moved to raise their price targets on PANW following a strong Q2 report. Goldman Sachs analyst Brian Essex raised the PT to $515.00 per share from $470.00 as favorable exposure to secular tailwinds drives growth inflection.
“Palo Alto has established itself as a leader among its peers with regard to organic and inorganic investment in its platform. Results this quarter indicate that investment is paying off, positioning the company well for one of the most substantial firewall spending cycles we’ve seen in years, in addition to an increasing enterprise focus on SASE-driven NextGen Security spending,” the analyst said in a client note.
Similarly, Morgan Stanley analyst Keith Weiss hiked the PT to a Street-high $550.00 per share from $515.00 on the Overweight-rated stock.
“The shift towards Cloud-based, software security solutions powered an acceleration to 34% YoY billings growth in Q4, with an above consensus guide for FY22. With management now signaling the platform as substantially complete, these solid growth rates should accrue a higher multiple,” Weiss said in a note sent to clients.
PANW is scheduled to host the Analyst Day on September 13th.