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What Makes Palo Alto Networks (PANW) a Strong Sell?

Zacks Equity Research

Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

One such stock that you may want to consider dropping is Palo Alto Networks, Inc. PANW, which has witnessed a significant price decline in the past four weeks, and it has seen negative earnings estimate revisions for the current quarter and the current year. A Zacks Rank #4 (Sell) further confirms weakness in PANW.

A key reason for this move has been the negative trend in earnings estimates revisions. For the full year, we have seen 15 estimates moving down in the past 30 days, compared with no upward revisions. This trend has caused the consensus estimate to trend lower, going from $6.25 a share a months ago to its current level of $5.29.

Also, for the current quarter, Palo Alto Networks has seen 11 downward estimate revision versus none revisions in the opposite direction, dragging the consensus estimate down to $1.08 a share from $1.35 over the past 30 days.

The stock also has seen some pretty dismal trading lately, as the share price has dropped 7% in the past month.

Palo Alto Networks, Inc. Price and Consensus

Palo Alto Networks, Inc. Price and Consensus

Palo Alto Networks, Inc. price-consensus-chart | Palo Alto Networks, Inc. Quote

So, it may not be a good decision to keep this stock in your portfolio anymore, at least if you don’t have a long-time horizon to wait.

If you are still interested in the Security industry, you may instead consider a better-ranked stock - CyberArk Software Ltd. CYBR. The stock currently holds a Zacks Rank #2 (Buy) and may be a better selection at this time. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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