Will Palo Alto Networks Set Records This Quarter?

Palo Alto Networks Inc PANW will report its third quarter financial results after the market closes on Wednesday and, according to Estimize, a record-setting quarter is expected.

In the same quarter last year, the company posted earnings of $0.11 per share on revenue of $150.7 million. For the current quarter, the company guided earnings of $0.20 per share on revenue of $221 million, and the Street models consensus earnings in line with guidance (on slightly higher revenue of $222.41 million).

The crowd is the most bullish, as it expects earnings to double, year-over-year, to $0.22 per share, on revenue of $229.63 million.

Related Link: FBR: Cybersecurity Momentum 'Solid' And In 'Early Innings'

The table below features a history of Palo Alto Networks’ estimates, earnings and revenues for the past couple of years. As it can be seen, the company has been growing at an astonishing rate (see YoY Growth line).

‘Premium' Valuation Looks Unattractive

In a recent report, analysts at Evercore Partners initiated coverage on Palo Alto Networks with a Hold rating and a $174 price target, alleging that valuation is too high.

According to an article published on Benzinga, the analysts think that Palo Alto is a "meaningful disruptor" within the enterprise firewall market and remain "constructive" on the company's growth potential, growing subscription offerings and revenue base. “Moreover, the company clearly believes that ‘platform wins’ in cybersecurity and offerings beyond the core firewall helps solidify its reputation with customers,” the note reads.

However, the firm sustains that Palo Alto’s disruptor status and reputation with clients is already priced into the stock, which trades at 10x EV/CY 16 Sales.

"International accounted for 33 percent of TTM revenue, and we continue to see considerable upside for Palo Alto going forward," the experts added. "However, with competitive partner channels already in place and at scale, we believe some conservatism may be warranted with the stock trading at a premium multiple to the group."