BofA Turns Bullish On Palo Alto Networks After Q1 Beat

Palo Alto Networks Inc PANW reported another quarter of strong results Monday, beating expectations, and raised its guidance for the year.

The solid guidance and enhanced disclosures suggest continued positive momentum, according to BofA Securities.

The Palo Alto Networks Analyst: Tal Liani upgraded Palo Alto Networks from Neutral to Buy and raised the price target from $270 to $330.

The Palo Alto Networks Thesis: The company reported revenue and earnings of $946 million and $1.62 per share versus Street expectations of $927 million and $1.33 per share, respectively, as well as strong billings of 20% year-over-year versus the consensus estimate of 16%, Liani said in the upgrade note.

Palo Alto also raised the fiscal 2021 guidance to 21% revenue growth, 18% billings growth and 18% earnings growth.

“In our view, strong guidance and enhanced disclosures around Firewall-as-a-Platform and Next-Gen Security revenues point to positive momentum with new growth areas and increased visibility in the transition to Next-Gen products and newer consumption models,” the analyst said. 

"Despite previous concerns of Firewall slowdown, new segment breakdowns suggest the Network Security business is expected to generate $3.5bn in revenues in FY21 up 14% YoY, with healthy 77% gross margin, 29% operating margin, and strong 15% YoY billings growth." 

PANW Price Action: Shares of Palo Alto Networks were up 1.77% at $283.43 at last check Tuesday.