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Cybersecurity cabinet Palo Alto NetworksThe wave of acquisitions (PANW) aimed at creating a large cloud-based platform appears to be gaining ground based on its outlook for fiscal 2022, analysts said. PANW stock hit an all-time high on Tuesday after its July quarter earnings beat.
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“Demand for cloud and Secure Access Service Edge (SASE) has remained robust as the company sees large contract activity accelerate based on the cross-selling of multiple products as a platform,” said William Blair analyst Jonathan Ho said in a report to clients.
PANW stock jumped 17.1% to 435.53 at the start of stock market action today. This has surpassed its all-time high of 406.92 set on August 5. With today’s gain, PANW action is extended.
The company released its fourth quarter results after the market closed on Monday. For fiscal 2022, Palo Alto expects revenues of between $ 5.27 billion and $ 5.32 billion and profits of between $ 7.15 and $ 7.25 per share. Analysts had forecast revenues of $ 5 billion and earnings of $ 7.09 per share.
Including acquisitions, Palo Alto’s earnings for the July quarter were $ 1.60 per adjusted share, up 8% from the prior year period. Revenue rose 28% to $ 1.2 billion, the company said. Analysts had expected earnings of $ 1.43 per share on sales of $ 1.17 billion.
PANW Stock: Revenue Growth of Dual Digital Products
Additionally, billings jumped 34% to $ 1.86 billion, beating earlier estimates of 23% growth.
“The double-digit growth in product revenue was notable given that this was the first time we have seen double-digit growth since the fourth quarter of 2019,” Ho added.
For the current quarter ending in October, Palo Alto expects earnings of between $ 1.55 and $ 1.58 per share, with revenue of $ 1.2 billion. Analysts had predicted earnings of $ 1.60 per share on revenue of $ 1.15 billion.
Palo Alto is forecasting $ 1.3 billion in billing against analysts’ estimates of $ 1.25 billion.
“PANW stocks have the potential to gain portfolio share by consolidating security spending, thanks to the strength of its large portfolio,” Keith Bachman, BMO Capital Markets analyst, said in his note to clients. “In addition, we believe investors will appreciate a slowdown in mergers and acquisitions in fiscal 2022, which will likely improve margins.”
The company acquisition frenzy
Meanwhile, the company has spent more than $ 3 billion to complete 10 acquisitions in the past three years. With roots in the “firewall” network security market, Palo Alto aims to create a broad, cloud-based security platform.
Meanwhile, Palo Alto is hosting an Analyst Day on September 13. PANW stock analysts expect the company to discuss trends in cybersecurity and its cloud platform.
Prior to Palo Alto’s earnings report, management’s outlook on profit margins was worrying.
“Although Palo has guided under the street on the margins, we do not consider the result to be as bad as the worst fears we have heard from investors,” said Adam Tindle, analyst at Raymond James, in a note.
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Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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