Nikesh Arora, Palo Alto Networks
Adam Galica | CNBC
Shares of Palo Alto Networks rose 12% in pre-market trading Monday, continuing a rally that began when the safety software vendor reported stronger than expected fiscal fourth quarter earnings last week.
The corporate reported adjusted quarterly earnings per share of $1.44 versus a Refinitiv analyst consensus of $1.28 per share. While Palo Alto missed consensus estimates for revenue, which got here in at $1.95 billion versus $1.96 billion for the quarter ended July 31, the corporate said that revenue increased 26% in comparison with the year-ago quarter.
There had been some concern amongst analysts that Palo Alto was slated to report bad news alongside its earnings, because it scheduled its earnings release date for after the bell Friday. Historically, it is a scheduling slot sometimes adopted by firms with poor numbers to report. Because of this, Palo Alto stock fell so far as $208.02 after it announced its earnings release date.
The pre-market rally signifies that Palo Alto’s shares have largely recovered from the plunge. Palo Alto CEO Nikesh Arora described the pre-earnings concern as making for “some very interesting reading” in analyst reports.
By Sunday evening, those concerns had also evaporated. Deutsche Bank analyst Brad Zelnick reiterated a Buy rating on the stock and took his price goal from $225 to $270.
“Our call for a possible transition away from hardware was unnecessary as the corporate put up impressive F4Q results and multi-year guidance without the necessity for any unusual theatrics; no management change, no M&A, no strategic pivots, and importantly no guide down on growth,” Zelnick wrote in a Sunday note to clients.
In a note to clients Monday morning, Bank of America analyst Tal Liani noted that “the corporate’s deal with profitability and higher cost controls helped drive a 16c beat to consensus’ $1.28.”
Bank of America took its price goal from $270 to $290, writing that each guidance and results “were better-than-expected given the unconventional timing of the earnings release.”
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