7 Analysts On Palo Alto Networks Earnings: Upbeat Results Despite 'Continued Tough Supply Environment'

Zinger Key Points
  • There is optimism around the company being able to sustain a “high 20% FCF growth over the next few years.”
  • KeyBanc Captial Markets sees strong security demand in 2022 with Palo Alto executing well despite supply challenges.

Palo Alto Networks Inc PANW reported revenues and earnings for its fiscal third-quarter ahead of expectations.

BofA Securities On Palo Alto Networks: Analyst Tal Liani reiterated a Buy rating and a price target of $650.

“Palo Alto Networks continues to draw strength from its new offerings with NGS ARR growing 65% YoY, a continuation of the 70%+ growth seen in the last two quarters,” Liani wrote in a note to clients. “FY22 guidance was raised across almost all metrics, with expectations for growth around both legacy and new areas,” he added.

BMO Capital Markets On Palo Alto Networks: Analyst Keith Bachman maintained an Outperform rating for the company while reducing the price target from $685 to $615.

“PANW’s report offered many highlights that we think will support the shares even amid a turbulent tech tape, led by 40% y/y billings, RPO and FCF growth, and 65% y/ y NextGen Security ARR growth,” Bachman said. He expressed optimism around the company being able to sustain a “high 20% FCF growth over the next few years.”

JMP Securities On Palo Alto Networks: Analyst Trevor Walsh maintained a Market Outperform rating and a $620 price target for the company.

The company’s strong quarterly print and full-year guidance raise were driven by “the ongoing refresh of firewall appliances where demand continues to outstrip supply and the Cortex platform reaching $500M in ARR, all contributing to notable billings acceleration,” Walsh said in a note.

Wells Fargo On Palo Alto Networks: Analyst Andrew Nowinski reiterated an Overweight rating and a price target of $700.

Palo Alto Networks reported “exceptionally strong” results, “highlighted by 65% Y/Y growth in Next-Gen ARR and 40% Y/Y growth in billings (highest in over 4 years),” Nowinski wrote. “While billings exceeded the consensus estimate by ~$200MM, management raised the billings guidance by ~$300MM,” he added.

“We also note that product revenue was solidly above consensus by 6%, driven by the start of a refresh cycle and market share gains. The company also continues to show solid profitability,” the Wells Fargo analyst further stated.

RBC Capital Markets On Palo Alto Networks: Analyst Matthew Hedberg maintained an Outperform rating for the company while keeping the price target unchanged at $680.

“Outperformance was broad-based as accelerating demand trends continued to drive ongoing share and consolidation gains,” Hedberg said in a note. “Incremental share catalysts include an ongoing product refresh, balanced growth/ margins, GAAP profitability and reduced stock-based comp,” he added.

Raymond James On Palo Alto Networks: Analyst Adam Tindle reiterated an Outperform rating and a $610 price target.

The company delivered upbeat results despite “a continued tough supply environment,” Tindle said.

“Active millionaire customer metrics remain healthy, growth in $5M+ deals was >70% y/y, and disclosures imply nearly half of G2K customers have purchased three pillars (Strata, Prisma, and Cortex),” the analyst wrote. He added, “This suggests incrementally more committed customers (and a stickier cash flow stream).”

KeyBanc Capital Markets On Palo Alto Networks: Analyst Michael Turits maintained an Overweight rating for the company while raising the price target from $610 to $630.

“Palo and Fortinet appear to be managing supply and taking share, growing revenue 29% and 34% this quarter, respectively, vs. Cisco security and Check Point both up 7%,” Turits wrote in a note. “We see strong security demand in 2022 with Palo executing well despite supply challenges, consolidating security spending, and expanding into cloud security,” he added.

PANW Price Action: Shares of Palo Alto Networks had risen by 8.85% to $475 at the time of publication Friday morning.

Posted In: Adam TindleAndrew NowinskiBMO Capital MarketsBofA SecuritiesCybersecurityJMP SecuritiesKeith BachmanKeyBanc Capital MarketsMatthew HedbergMichael TuritsRaymond JamesRBC Capital MarketsTal LianiTrevor WalshWells FargoEarningsNewsPrice TargetReiterationAnalyst RatingsTechTrading Ideas