Analyst Sees Pullback In Palo Alto As Buying Opportunity

• Palo Alto Networks Inc PANW shares are down 19 percent since July 24, as compared to a 9 percent decline in the Nasdaq.
• JMP Securities' Erik Suppiger maintained a Market Outperform rating and a price target of $210.
• The recent decline in Palo Alto shares offers an attractive buying opportunity ahead of a strong quarter, Suppiger said.

Analyst Erik Suppiger pointed out that market checks suggest an accelerated in Palo Alto's sales momentum in F4Q15 and continued share gaining by the company with strength in North America.

"We believe the company is investing aggressively in sales to continue its rapid top-line growth with new products, such as its high-end security platform, representing key drivers," Suppiger added.

The company is scheduled to provide its earnings report on September 9. The billings estimate for F4Q15 has been raised by $16 million to $345 million, representing 48 percent year-over-year growth. The EPS and revenue estimates for F4Q15 have been raised from $0.25 to $0.26 and from $256 million to $263 million, respectively.

In the report JMP Securities noted, "We reduce our valuation assumption to 38x from 43x to reflect a compression in multiples across the security sector. While the entire security sector has traded off in the last month, we feel the sell-off in PANW shares (down 19% vs. Nasdaq down 9%) represents a particularly attractive buying opportunity ahead of what we believe will be a very strong quarter."