Palo Alto Networks Stock Is Tumbling Wednesday: What's Going On?

Palo Alto Networks Inc PANW shares are trading lower Wednesday after the company issued weak guidance when it reported quarterly results. Multiple analysts either downgraded or cut price targets on the stock following the print.

• Q2 Revenue: $1.98 billion, beat estimates of $1.97 billion

• Q2 EPS: $1.46, beat estimates of $1.30

Total revenues increased 19% on a year-over-year basis. Remaining performance obligations grew 22% year-over-year to $10.8 billion. Adjusted operating margin grew 580 basis points year-over-year to 29%.

“Our leadership across all of our three platforms and growing cross-platform adoption puts us in a strong and unique position. With this backdrop, we are activating our accelerated platformization and consolidation strategy, as well as our AI leadership strategy,” said Nikesh Arora, chairman and CEO of Palo Alto Networks. 

Outlook: Palo Alto sees fiscal third-quarter revenue of $1.95 billion to $1.98 billion versus estimates of $2.04 billion. The company expects third-quarter adjusted earnings to be between $1.24 and $1.26 per share versus estimates of $1.29 per share. 

Palo Alto guided for full-year 2024 revenue between $7.95 billion and $8 billion versus estimates of $8.19 billion. The company said it sees full-year earnings between $5.45 and $5.55 per share versus estimates of $5.51 per share.

Analyst Changes:

• Loop Capital analyst Yun Kim downgraded Palo Alto from Buy to Hold and announced a $300 price target.

• Rosenblatt analyst Catharine Trebnick downgraded Palo Alto from Buy to Neutral and lowered the price target from $290 to $265.

• Needham analyst Alex Henderson reiterated Palo Alto with a Buy and maintained a $345 price target.

• Wedbush analyst Daniel Ives maintained Palo Alto with an Outperform and lowered the price target from $425 to $375.

PANW Price Action: Palo Alto shares were down 23.8% at $278.50 at the time of writing, according to Benzinga Pro.

Photo: Kris from Pixabay.