Nikesh Arora, Palo Alto Networks
Adam Galika | CNBC
shares of Palo Alto Networks It climbed more than 14% in Monday morning trading, continuing a rally that began last week when the security software vendor reported better-than-expected fourth-quarter earnings for the fiscal year.
The company reported an adjusted quarterly earnings of $1.44, versus Refinitiv analyst consensus of $1.28 per share. Palo Alto fell short of the consensus forecast of $1.95 billion in revenue for the quarter ended July 31, compared to its revenue forecast of $1.96 billion, but fell short of revenue in the same period last year. The company announced a 26% increase in sales.
Analysts were concerned that Palo Alto’s earnings announcement would come after the bell on Friday, and bad news might come along with it. Historically, this is a timeline sometimes adopted by companies with poor numbers to report. As a result, Palo Alto stock fell to $208.02 after the earnings day announcement.
A pre-market rally means Palo Alto shares have largely recovered from the crash. Palo Alto Chief Executive Nikesh Arora said pre-earnings concerns make for “very interesting reading” in analyst reports.
By Sunday evening, those concerns were gone. Deutsche Bank analyst Brad Zelnick repeated his buy rating on the stock, raising his price target to $270 from $225.
“Our request for a possible migration away from hardware was unnecessary because the company presented excellent F4Q results and multi-year guidance without requiring a specific strategy. No changes, no M&A, no strategic shifts, and importantly, growing,” Zelnick wrote in a note to clients on Sunday.
Bank of America analyst Tal Riani said in a note to clients Monday morning that “the company’s focus on improving profitability and cost control has pushed it 16 cents above the consensus $1.28. ” he pointed out.
Bank of America raised its price target to $290 from $270, writing that both guidance and results beat expectations given the unusual timing of the earnings release.
clock: Palo Alto product surge is being digested, analysts say
