Analyst: Still Looking For Palo Alto Shares To Bottom Out

Markets are reaching new all-time highs, but Palo Alto Networks Inc PANW isn't reaping any of the benefits. Shares are down 22 percent on following a handful of downgrades following a large third quarter miss.

Of the firms that downgraded Palo Alto Networks were William Blair, JP Morgan, First Analysis and Wunderlich.

Analysts at BMO Capital are still looking for a bottom on the company, maintaining a Market Perform rating, but lowered its price target to $132 from $160.

Related Article: Palo Alto's Competitive Pressure From Cisco To Blame For Downgrade

“We believe that PANW’s growth is slowing given the force of gravity from a maturing network security market, increased competition, especially from CSCO’s increased focus on its security business,” BMO software analyst Keith Bachman said.

Several key metrics from Palo Alto continue to decelerate, including year-over-year growth and revenue growth, which is expected to decline for a seventh consecutive quarter. Analysts also lowered FY2017 EPS estimate to $2.48 down from $2.81, with the assumption that “PANW’s premium pricing will negatively affect its longer-term growth potential.”

BMO believes Check Point Software Technologies Ltd. CHKP may be the best stock choice in the network security industry, and doesn’t believe the company will face the same decelerating revenue pressures Palo Alto is facing.