Palo Alto Networks, Inc. PANW is scheduled to report its first-quarter fiscal 2025 results on Nov. 20.
Palo Alto Networks projects its fiscal first-quarter revenues in the range of $2.10-$2.13 billion, which suggests a year-over-year increase of 12-13%. The Zacks Consensus Estimate is pegged at $2.12 billion, which implies growth of 12.8% from the year-ago reported figure.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
For the fiscal first quarter, the company expects non-GAAP earnings in the range of $1.47-$1.49 per share. The consensus mark for PANW’s non-GAAP earnings has remained unchanged at $1.41 over the past 60 days, which calls for a 7.3% increase from the year-ago quarter’s earnings of $1.38.
Image Source: Zacks Investment Research
Palo Alto Networks’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 12.4%.
Palo Alto Networks, Inc. Price and EPS Surprise
Palo Alto Networks, Inc. price-eps-surprise | Palo Alto Networks, Inc. Quote
Earnings Whispers for PANW
Our proven model does not conclusively predict an earnings beat for Palo Alto Network this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
Though PANW currently carries a Zacks Rank #2, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Factors Likely to Influence Palo Alto’s Q1 Results
Palo Alto Networks’ first-quarter performance is likely to have benefited from the strong momentum stemming from deal wins, which is expected to boost its top line. The strong demand for form factor hardware products, particularly machine learning-powered models that ensure zero-trust network security for organizations, is expected to have contributed to the quarterly performance.
The growing and accelerated migration to the cloud is likely to have boosted the adoption of the aforementioned platforms. Moreover, the increased use of the cloud and remote networks in a hybrid working environment has resulted in escalating cyberattacks. This is leading to a rise in the demand for cybersecurity solutions. PANW’s fiscal first-quarter performance is likely to have benefited from this demand surge.
Federal Risk and Authorization Management Program (FedRAMP) recognitions are boosting the adoption of Palo Alto Networks’ products by government organizations. The company’s Prisma Access, Cortex XDR, Cortex Data Lake, Prisma Cloud and WildFire received FedRAMP recognitions. This FedRAMP recognition reflects the U.S. public sector’s trust in PANW’s IoT security solutions. This is anticipated to have encouraged the adoption of its products during the period in discussion.
A higher software mix, normalization in the supply-chain environment and efficiencies in customer support are anticipated to have aided the gross margin in the to-be-reported quarter.
PANW’s Price Performance & Valuation
Year to date, shares of Palo Alto Networks have risen 31.2%, outperforming the Zacks Internet – Software industry’s increase of 25.1% and the Technology Select Sector SPDR Fund XLK ETF’s gain of 18.8%. The PANW stock has also outperformed its peers, including Juniper Networks JNPR and Check Point Software Technologies CHKP, which have registered increases of 23.8% and 14%, respectively, YTD.
YTD Price Return Performance
Image Source: Zacks Investment Research
Now, let’s look at the value Palo Alto Networks offers investors at the current levels. PANW is trading at a premium with a forward 12-month P/S of 13.21X compared with the industry’s 2.71X, reflecting a stretched valuation.
Image Source: Zacks Investment Research
Investment Consideration for PANW Stock
Palo Alto Networks is a leader in cybersecurity, offering solutions that address network security, cloud security and endpoint protection. Its next-generation firewall and advanced threat detection technologies are widely recognized and adopted globally.
PANW’s innovative product offerings, strong customer base and expanding market opportunities in areas like Zero Trust and private 5G security solutions drive its growth potential. Palo Alto Networks' strategic vision and continuous technological advancements make it a compelling long-term investment opportunity.
Palo Alto Networks’ platformization strategy, which integrates various cybersecurity tools into a seamless offering, has been a game-changer. By focusing on annual recurring revenues rather than traditional one-time sales, the company has secured a more predictable and stable revenue stream, which is attractive to investors. This shift has allowed Palo Alto Networks to grow its market share among enterprises making large, long-term commitments.
Conclusion: Buy PANW Stock for Now
Palo Alto Networks has strong fundamentals and a bright future ahead. Its leadership in the rapidly expanding cybersecurity space, coupled with consistent growth in annual recurring revenues and innovative partnerships, makes it a strong long-term investment. The company is likely to continue benefiting from the growing need for advanced cybersecurity solutions.
Only $1 to See All Zacks' Buys and Sells
We're not kidding.
Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.
Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.
See Stocks Now >>Juniper Networks, Inc. (JNPR) : Free Stock Analysis Report
Check Point Software Technologies Ltd. (CHKP) : Free Stock Analysis Report
Palo Alto Networks, Inc. (PANW) : Free Stock Analysis Report
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
