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Palo Alto (PANW) to Report Q1 Earnings: What's in the Cards?

Zacks Equity Research

Palo Alto Networks Inc. PANW is slated to release first-quarter fiscal 2020 results on Nov 25.

For the quarter, Palo Alto anticipates revenue growth of 16-17% year over year. The Zacks Consensus Estimate for the same is pegged at $767.6 million, indicating 17% growth from the year-ago reported number.
 
Non-GAAP earnings are estimated in the range of $1.02-$1.04 per share. The consensus mark for the same is pegged at $1.03 per share, suggesting an 12% fall year over year.

The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average positive surprise being 10.9%.

Palo Alto Networks, Inc. Price and EPS Surprise

Palo Alto Networks, Inc. Price and EPS Surprise

Palo Alto Networks, Inc. price-eps-surprise | Palo Alto Networks, Inc. Quote

In the last reported quarter, non-GAAP earnings of $1.47 per share not only jumped 14.8% year over year but also surpassed the Zacks Consensus Estimate by 1.4%.

Moreover, the company’s revenues of $805.8 million increased 22%, outpacing the consensus estimate of $803 million.

Factors at Play

Palo Alto is benefiting from a healthy demand environment for cybersecurity solutions. The fiscal first-quarter top line is expected to reflects strong adoption of the company’s cyber security solutions. Further, it is witnessing significant momentum for deal wins, which is likely to have driven revenues.

The company is also gaining from the acquisition of Redlock, which forms the basis of the Prisma public cloud; and Demisto, which forms the basis of Cortex. Notably, it crossed $452 million billings in Prisma and Cortex in the last reported quarter. This trend is expected to have continued in the fiscal first quarter as well.

Palo Alto is expected to have gained from its Prisma access, which continues to win high-value deals. In the last reported quarter, the company beat Zscalar ZS to a $10 million plus deal.

However, competition from players such as Fortinet FTNT and CrowdStrike CRWD in the security application market is a downside.

Moreover, expenses related to the acquisition of Zingbox, which closed in the fiscal first quarter, is likely to have been an overhang on the bottom line.

Palo Alto currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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