Upbeat Results Despite ‘Continued Tough Supply Environment’

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Palo Alto Networks Inc. on Thursday reported revenues and earnings for its fiscal third-quarter ahead of expectations.

BofA Securities on Palo Alto Networks

Analyst Tal Liani reiterated a Buy rating and a price target of $650.

“Palo Alto Networks continues to draw strength from its new offerings with NGS ARR growing 65 percent YoY, a continuation of the 70 percent + growth seen in the last two quarters,” Liani wrote in a note to clients. “FY22 guidance was raised across almost all metrics, with expectations for growth around both legacy and new areas,” he added.

BMO Capital Markets on Palo Alto Networks

Analyst Keith Bachman maintained an Outperform rating for the company while reducing the price target from $685 to $615.

“PANW’s report offered many highlights that we think will support the shares even amid a turbulent tech tape, led by 40 percent y/y billings, RPO and FCF growth, and 65 percent y/ y NextGen Security ARR growth,” Bachman said. He expressed optimism around the company being able to sustain a “high 20 percent FCF growth over the next few years.”

JMP Securities on Palo Alto Networks

Analyst Trevor Walsh maintained a Market Outperform rating and a $620 price target for the company.

The company’s strong quarterly print and full-year guidance raise were driven by “the ongoing refresh of firewall appliances where demand continues to outstrip supply and the Cortex platform reaching $500M in ARR, all contributing to notable billings acceleration,” Walsh said in a note.

Wells Fargo on Palo Alto Networks

Analyst Andrew Nowinski reiterated an Overweight rating and a price target of $700.

Palo Alto Networks reported “exceptionally strong” results, “highlighted by 65 percent Y/Y growth in Next-Gen ARR and 40 percent Y/Y growth in billings (highest in over 4 years),” Nowinski wrote. “While billings exceeded the consensus estimate by ~$200MM, management raised the billings guidance by ~$300MM,” he added.

“We also note that product revenue was solidly above consensus by 6 percent, driven by the start of a refresh cycle and market share gains. The company also continues to show solid profitability,” the Wells Fargo analyst further stated.

RBC Capital Markets on Palo Alto Networks

Analyst Matthew Hedberg maintained an Outperform rating for the company while keeping the price target unchanged at $680.

“Outperformance was broad-based as accelerating demand trends continued to drive ongoing share and consolidation gains,” Hedberg said in a note. “Incremental share catalysts include an ongoing product refresh, balanced growth/ margins, GAAP profitability and reduced stock-based comp,” he added.

Raymond James on Palo Alto Networks

Analyst Adam Tindle reiterated an Outperform rating and a $610 price target.

The company delivered upbeat results despite “a continued tough supply environment,” Tindle said.

“Active millionaire customer metrics remain healthy, growth in $5M+ deals was >70 percent y/y, and disclosures imply nearly half of G2K customers have purchased three pillars (Strata, Prisma, and Cortex),” the analyst wrote. He added, “This suggests incrementally more committed customers (and a stickier cash flow stream).”

KeyBanc Capital Markets on Palo Alto Networks

Analyst Michael Turits maintained an Overweight rating for the company while raising the price target from $610 to $630.

“Palo and Fortinet appear to be managing supply and taking share, growing revenue 29 percent and 34 percent this quarter, respectively, vs. Cisco security and Check Point both up 7 percent,” Turits wrote in a note. “We see strong security demand in 2022 with Palo executing well despite supply challenges, consolidating security spending, and expanding into cloud security,” he added.

By Priya Nigam 

© 2022 The Epoch Times. The Epoch Times does not provide investment advice. All rights reserved.

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