Goldman Sachs Still Bullish On Palo Alto

Palo Alto Networks Inc PANW reported its Q4FY16 results with the revenue beating the consensus and raised the FY17 product revenue growth guidance.

Goldman Sachs’ Gabriela Borges reiterated a Buy rating on the company, while raising the price target from $165 to $175.

Q4 Results

The company reported Q4EY16 revenue of $401 million, representing 41 percent year-on-year growth and 3 percent above the consensus and the estimate.

Billings came in at $572 million, representing growth of 45 percent year-on-year and 2 percent above the consensus.

The EPS of $0.50 also beat the consensus and the estimate.

Forward Guidance

Management guided to Q1FY17 revenue of $396–$402 million, in line with the consensus, although the EPS guidance of $0.51–$0.53 missed the consensus expectation.

Related Link: Palo Alto "Ripped Off The Band-Aid" For The Next Generation Security Platform

Palo Alto guided to non-GAAP EPS of $2.75–2.80 for FY17, including $0.25 from the recognition of commissions rateably, excluding which the EPS guidance would have missed expectations.

The company also announced at $500 million share buyback program, while raising the FY17 product revenue growth guidance from 12 percent to 13 percent year-on-year.

“We believe this reset will be a catalyst for short covering, with estimates now achievable, if not conservative, given a tailwind from existing customers upgrading and potential catalysts such as government spending,” the analyst mentioned.

Borges expressed increased confidence in “Palo Alto’s ability to gain share in a market that is poised to recover cyclically.”

Despite the positive rating, Palo Alto was down over 4 percent in Wednesday's pre-market trading.

Full ratings data available on Benzinga Pro.