Here's The Sell-Side Reaction To Palo Alto's Disappointing Q1 Earnings

These are reactions of some sell-side analysts to the disappointing results, which have subsequently sent the shares tumbling along with cybersecurity peers.

Baird's Positive Opinion Sustained

Baird said it did not hear anything or see anything in the financials that dampens its positive opinion on the shares of the company. Accordingly, the firm sees the downside as another buying opportunity. The firm introduced its 2018 estimates of $3.80 per share in earnings and $2.31 billion in revenues, assuming 8 percent product growth and 41 percent subscription and support growth.

Analyst Jayson Noland noted the company's commentary that the weak results were due to extended sales cycles, particularly with a handful of large customers in the Americas. The firm's channel checks show the company to be the thought leader in a category of the market likely to undergo consolidation.

Baird has an Outperform rating and a $175 price target on the shares of the company.

Results Not Robust As D.A. Davidson Expected

D.A. Davidson said the results were not as robust as expected. Given the increasing strategic nature of security and the company's platform, the firm noted that more approvals are sometimes required. The management confirmed that the pushed out deals have since then closed, the firm added.

The firm lowered its estimates for 2017 and 2018 but reiterated its Buy rating and $186 price target.

Suspect A Digestion Period In Network Security Industry

Wunderlich said it suspected a digestion period in the network security industry that is delaying the pace of large deals this year. The firm maintained its Buy rating and $190 price target, as it believes the company is well positioned to gain market share and generate operating leverage. Despite the company expecting a second-half ramp up, the firm lowered its 2017 and 2018 revenue estimates.

Long Term Thesis Remains Very Much Intact

Given that Stifel expected first-quarter expectations had been de-risked due to reduced expectations surrounding product revenue growth and the generally positive tone surrounding its checks, the firm said it was disappointed with the print. However, the firm believes the company to be among the best positioned vendors within the security arena, although it believes timing of deal closings could fluctuate, impacting quarterly results. Additionally, the firm sees impact from competitive pressure.

The firm is also of the view the core fundamentals remain healthy, and it sees a robust pipeline for both new customers as well as continued up-sell within the installed base. Accordingly, the firm sees any trading weakness as an opportunity.

Deutsche Bank Trims Estimates, Maintains Hold Rating

Deutsche Bank analyst Karl Keirstead did not seem to like the big deceleration in product revenue growth, the slightly-below consensus second-quarter revenue guidance and the slowdown in the network firewall space as implied by the company's commentary. The first-quarter underperformance, according to the analyst, will raise concerns over whether the second half will see adequate acceleration to hit the full year guidance. Deutsche Bank lowered its 2017 revenue and billings guidance but maintained its Hold rating and $150 price target.

At the time of writing, Palo Alto shares were tumbling 14.03 percent to $138.48 on roughly 3.5 times its average volume.