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Analyst: Palo Alto Networks Is No Longer A 'Show Me' Story

Analyst: Palo Alto Networks Is No Longer A 'Show Me' Story
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Heading into Palo Alto Networks Inc (NYSE: PANW)'s earnings report Thursday, analysts at BTIG felt that the stock was a "show me story." But after the company's earnings report came in better than expected, the firm's Joel Fishbein Jr. maintains a Buy rating on Palo Alto with a price target boosted from $155 to $175.

Perhaps more importantly, Palo Alto's revenue, billings and earnings per share metrics in the quarter were all better than expected, and the company has "moved beyond a show me story," Fishbein commented in a research report (see his track record here). Of particular note, the company added approximately 3,000 new customers, which represents its largest amount ever and brings its total customer count to more than 42,500.

Also, the company gained 2,000 new WildFire customers in the quarter, which brings its total count to over 19,000 while VM-Series, Aperture, AutoFocus and Traps were all strong performers in the quarter, the analyst added.

Finally, Palo Alto's subscription and support recurring revenue accounts for 58 percent of the company's entire revenue and rose 42 percent year over year, which implies a $1.2 billion annual run rate.

Looking forward to the full-year fiscal 2018, Palo Alto's revenue guidance of 21 to 23 percent year-over-year growth to $2.125 billion to $2.165 billion is in line with what the Street had expected but is also likely to be conservative.

"The refresh cycle, strength in customer acquisition, and several new products hitting the market give us confidence in FY18's outlook," Fishbein concluded. "Moreover, sales productivity should
further improve as the company works its way through the sales reorg (as the company moves into the 6th inning)."

At last check, shares of Palo Alto were up 8.03 percent at $143.34.

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Latest Ratings for PANW

Sep 2018CitigroupMaintainsBuyBuy
Sep 2018Credit SuisseMaintainsUnderweightUnderweight
Sep 2018Morgan StanleyMaintainsOverweightOverweight

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