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Goldman Sachs Still Bullish On Palo Alto

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Goldman Sachs Still Bullish On Palo Alto

Palo Alto Networks Inc (NYSE: PANW) reported its Q4FY16 results with the revenue beating the consensus and raised the FY17 product revenue growth guidance.

Goldman Sachs’ Gabriela Borges reiterated a Buy rating on the company, while raising the price target from $165 to $175.

Q4 Results

The company reported Q4EY16 revenue of $401 million, representing 41 percent year-on-year growth and 3 percent above the consensus and the estimate.

Billings came in at $572 million, representing growth of 45 percent year-on-year and 2 percent above the consensus.

The EPS of $0.50 also beat the consensus and the estimate.

Forward Guidance

Management guided to Q1FY17 revenue of $396–$402 million, in line with the consensus, although the EPS guidance of $0.51–$0.53 missed the consensus expectation.

Related Link: Palo Alto "Ripped Off The Band-Aid" For The Next Generation Security Platform

Palo Alto guided to non-GAAP EPS of $2.75–2.80 for FY17, including $0.25 from the recognition of commissions rateably, excluding which the EPS guidance would have missed expectations.

The company also announced at $500 million share buyback program, while raising the FY17 product revenue growth guidance from 12 percent to 13 percent year-on-year.

“We believe this reset will be a catalyst for short covering, with estimates now achievable, if not conservative, given a tailwind from existing customers upgrading and potential catalysts such as government spending,” the analyst mentioned.

Borges expressed increased confidence in “Palo Alto’s ability to gain share in a market that is poised to recover cyclically.”

Despite the positive rating, Palo Alto was down over 4 percent in Wednesday's pre-market trading.

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Latest Ratings for PANW

DateFirmActionFromTo
Jan 2021KeyBancMaintainsOverweight
Jan 2021Credit SuisseMaintainsNeutral
Jan 2021Morgan StanleyMaintainsOverweight

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