Palo Alto Networks stock jumps on strong outlook CEO calls ‘prudent’

Shares of Palo Alto Networks Inc. rose in the extended session on Monday after the cybersecurity company not only said its forecast, which beat Wall Street estimates, was “prudent” due to macroeconomic uncertainty, but also announced a stock split.

Palo Alto Networks PANW,
-1.06%
Shares rallied more than 8% after hours, after falling 1.1% in the regular session to close at $508.05. The company said its board announced a three-for-one stock split to take effect on September 14.

The company said it expects adjusted earnings of $2.03 to $2.06 per share on revenue of $1.54 billion to $1.56 billion and charges of $1.68 billion to $1.7 billion for the fiscal first quarter and 9.40 to 9 .50 per share on revenue of $6.85 billion to $6.9 billion and charges of $8.95 billion to $9.05 billion for the year.

Analysts polled by FactSet had forecast $2.03 a share on revenue of $1.54 billion and charges of $1.69 billion for the first quarter and $9.27 a share on revenue of $6.74 billion and charges of $8.58 billion for the year.

And that wisely takes into account potential macroeconomic headwinds, Nikesh Arora, chairman and CEO of Palo Alto Networks, told analysts.

“We have companies cutting guidance, companies cutting EPS guidance, companies warning that potential customer transaction lifecycles are shorter, so we were trying to make sure we were prepared for both the downside scenario,” Arora told analysts. “I think it’s fair to be prudent in this market.”

The company has been racking up beat-and-raise quarters of late. In May, the company raised its annual outlook for the third consecutive quarter to a full-year outlook of adjusted earnings of $7.43 to $7.46 per share, revenue of $5.48 billion to $5.5 billion and charges of 7 .11 billion to $7.14 billion. The company reported adjusted earnings of $7.56 per share on revenue of $5.5 billion and charges of $7.47 billion.

For the fiscal fourth quarter, Palo Alto Networks reported net income of $3.3 million, or 3 cents per share, compared with a loss of $119.3 million, or $1.23 per share, in the prior period. Adjusted earnings, which exclude stock-based compensation charges and other items, were $2.39 per share, compared to $1.60 per share in the prior period.

The security software company’s revenue rose to $1.55 billion from $1.22 billion in the previous quarter. Charges, which reflect future contract activity, rose 44% to $2.7 billion from a year ago.

Analysts had expected earnings of $2.28 per share on revenue of $1.54 billion and charges of $2.33 billion, based on Palo Alto Networks’ forecast of $2.26 to $2.29 per share on revenue of $1.53 billion to $1.55 billion and charges of $2.35 billion.

Shares of Palo Alto Networks are down 9% for the year. In comparison, the ETFMG Prime Cyber ​​Security ETF HACK,
-1.90%
down 20%, the S&P 500 SPX,
-2.14%
down 13%, and the tech-heavy Nasdaq Composite Index COMP,
-2.55%
if 20% discount.

Leave a Reply

Your email address will not be published.