Wells Fargo Trims Valuation Range on Palo Alto Networks (PANW) Following Q1 Results, Outlook

Wells Fargo lowers its valuation range on Outperform-rated Palo Alto Networks (NYSE: PANW) from $183 - $191 down to $172 - $180 following Q1 results issued Monday night.

The firm commented, PANW reported mixed FQ1'17 results with slightly lower than expected revenue and billings vs. street estimates but better than expected EPS. In addition, FQ2 guidance was soft with revenue 2% below prior street forecasts and EPS fractionally light. The company cited longer sales cycles and macro uncertainty impacting trends in the quarter. Looking forward, guidance implies low single digit product revenue growth in FQ2 and a reacceleration to 18% growth in 2H'17. Management appeared confident in the 2H ramp in part due to an existing customer refresh and ramping trends in the service provider segment. We slightly reduced our estimates. We now forecast FY'17 / FY'18 billings of $2.47B / $3.08B vs $2.53B / $3.16B previously. We tweaked our FY'18 EPS ests to $3.72 from $3.76 previously. Lastly, we reduced our valuation range to $172 - $180/share from $183 - $191 previously - primarily due to a lower multiple assumption.

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