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Palo Alto Soars 15% On Thursday, But What Are Analysts Saying?

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Palo Alto Soars 15% On Thursday, But What Are Analysts Saying?

Shares of Palo Alto Networks Inc (NYSE: PANW) gained more than 15 percent on Thursday after the company's fiscal third-quarter report handily exceeded expectations.

Here is a summary of what some of Wall Street's most notable analysts are saying about Palo Alto's stock after the report.

JMP

  • JMP's Erik Suppiger maintains a Market Outperform rating and raised the price target from $155 to $165.
  • The revenue beat foreshadows a recovery, as sales productivity improved and attrition could return to prior "normal" levels.
  • The company added more clients in Q3 than in any other period.
  • New products are gaining significant traction, especially refreshed firewall products.

Piper Jaffray

  • Piper Jaffray's Andrew Nowinski maintains an Overweight rating and raised the firm's price target from $150 to $156.
  • Nowinski said the company demonstrated progress in "rebuilding momentum" after the prior quarter's miss.
  • Palo Alto is well-positioned to deliver a revenue growth rate of 20 to 25 percent over the next two years.
  • Management's guidance appears conservative and doesn't include increased traction of new products.

BTIG

  • BTIG's Joel Fishbein maintains a Buy rating and a $155 price target.
  • Palo Alto's report serves as proof that the underlying fundamentals remain "pretty good" and should offer some relief to the stock.
  • Investors still need to see a few more positive quarters as the company remains a "show me story."
  • Nevertheless, the analyst is confident that the company is "not too far away from once again firing on all cylinders.

Jefferies

  • Jefferies' John DiFucci
    maintains a Buy rating and raised the price target from $150 to $155.
  • Business metrics were modestly better in the quarter, although the company did face a "relatively low bar."
  • The earnings report does, however, reflect a return to modest growth after last quarter's decline.
  • Management's guidance appears to be prudent and reflects uncertainty around the impact of a new OS required with new products.

Wunderlich

  • Wunderlich's Bill Choi maintains a Hold rating and $150 price target.
  • Investors should be encouraged by the report, which showed signs of stabilization in the sales cycles and improved predictability of the business.
  • The stock may look attractive on a free cash flow basis, but this could be overshadowed by the three-year duration of new subscriptions and support contracts.
  • Also, the company's refresh could see delays or its expansion could fall short of historical patterns, especially if competitors are more sticky.

At time of publication, shares of Palo Alto were up 15.72 percent at $137.23.

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