- Growth has slowed in recent quarters
- Billings a key area to watch
- Analysts remain optimistic
Cybersecurity firm Palo Alto Networks (PANW:NASDAQ) could soar to $425, according to US analyst BTIG, which recently raised its price target on the stock from $343 to $425.
Palo Alto has been running hot so far in 2024, with the shares up 27% already at $366.41. The $116 billion business is widely recognised as a global leader in digital defences, providing a suite of network and cloud protection, and advanced firewalls tools.
Chief executive Nikesh Arora was at the Davos WEF conference in Switzerland last month and spoke freely about the company’s strategic ambitions. Second quarter earnings after US markets close this evening (20 Feb) will give investors a steer on growth and demand.
WHAT THE MARKET EXPECTS
Consensus its pitched at $1.3 earnings per share on $1.97 billion revenue, implying rough 24% and 16% year-on-year growth respectively. BTIG analysts reckon the company will hit those targets and, importantly, maintain full year (to 31 Jul) guidance.
Analysts remain largely optimistic on the stock, with 39 of the 49 that follow the company calling the shares a buy.
One key area to watch is billings, the amount invoiced to customers in each period. This has been something of a weak spot for Palo Alto in recent quarters, rising 16% year-on-year in Q1 to 31 October 2023. The company has previously said it anticipates Q2 billings growth of 15% to 18% with a tighter range of 16% to 17% expected for the full year.
Prisma Cloud, Palo Alto’s cloud application security product, has faced increased competition, leading to a deceleration in growth. The company will be hoping that lower cost of capital as the year wears on will help lift corporate investment in the core IT solutions it provides.
