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Palo Alto's Strong Earnings Prove It's in 'Right Spot at Right Time,' Analyst SaysPalo Alto's Strong Earnings Prove It's in 'Right Spot at Right Time,' Analyst SaysBarron's (Online); New York Palo Alto Networks reported strong earnings that pleased Wall Street as solid cyber demand continues to drive growth. Palo Alto (ticker: PANW) posted fiscal first-quarter earnings and sales that beat analysts' expectations and raised its financial guidance for the full year as customers spent more on cybersecurity. "Our growth in the first quarter was driven by customers continuing to increase their commitments to our security platforms as they are able to choose our best-of-breed capability and simplify their security architecture," Chief Executive Nikesh Arora said in the earnings release. The stock surged 9.8% Friday as investors took in the results. Wall Street analysts were optimistic about the quarter and what that could mean for future growth at the cybersecurity company. Wedbush analyst Dan Ives wrote in a research note that "the company is in the right spot at the right time to benefit from this multi-year wave of cybersecurity enterprise spending despite an uncertain economic backdrop." He maintained his Buy rating and $200 price target on the stock, and added that not only is he optimistic about Palo Alto's performance he feels strongly about the cybersecurity sector as a whole over the next few years. Ives wasn't the only analyst feeling this way. Throughout the year, analysts have become bullish on cybersecurity stocks amid an environment of growing geopolitical risks, including the Russian invasion of Ukraine, on top of general digital threats affecting companies everyday. Cybersecurity demand is what helped Palo Alto do so well during the quarter, wrote Raymond James analyst Adam Tindle. "Macro challenges were acknowledged, but trumped by prioritization of security demand and a broadened portfolio that is successfully consolidating customer spending," Tindle wrote in a research note. He maintained his Outperform rating and $215 price target on the stock. William Blair analyst Jonathan Ho also maintained his Outperform rating on the stock and said in a research note that "at a time when customers are facing more constraints to their IT and security budgets, we believe Palo Alto's approach of delivering a platform consisting of best-of-breed solutions is resonating well and will lead to greater wallet share capture overtime." While Palo Alto stock has fallen 7.5% in 2022, it has performed better than the S&P 500, which has tumbled 17%. Of the 41 analysts surveyed by FactSet, 90% have a Buy rating on the stock, 10% say it's a Hold and none rate it at Sell. |
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