Proactive Investors - Palo Alto Networks Inc (NYSE:NASDAQ:PANW, ETR:5AP) is expected to report a “solid quarter overall” for the quarter ended April 30, 2024, analysts at Bank of America (NYSE:BAC) believe.
The cybersecurity solutions provider will report its fiscal third quarter 2024 financial results on Monday, May 20 after the stock market closes.
For fiscal 3Q, it has guided total billings in the range of $2.3 billion to $2.35 billion, representing year-over-year growth of 2% to 4%.
Revenue is expected to grow 13% to 15% year-over-year to between $1.95 billion to $1.98 billion and adjusted earnings per share (EPS) is forecast to be in the range of $1.24 to $1.26.
Wall Street analysts on average expect Palo Alto to report EPS of $1.25 on revenue of $1.97 billion.
The Bank of America analysts see Palo Alto Networks reporting solid overall results for the quarter on the back of reduced expectations and growth in Next Generation Security (NGS), likely offset by weak firewall trends.
“We divide up our expectations into three parts: we expect firewalls to be weak yet believe Street expectations are low,” they wrote in a note to clients.
Street expectations for product revenue are low, calling only for 0.6% year-over-year product revenue growth of 0.6% versus 10.7% in the last two quarters, the analysts pointed out.
“We expect the market to remain weak over the next two quarters before normalizing back to the long-term growth rates of 0% to 5%,” they wrote.
“Analyzing Palo Alto's product revenue segment, we estimate that the company's firewall appliance revenue declined 33.4% and 17% in the last two quarters and our model calls for product revenue to have downside risk, with 1.8% and 5.2% year-over-year declines in fiscal 3Q 2024 and fiscal 4Q 2024.”
The analysts expect solid trends for Palo Alto’s cloud solution Prisma to continue to support strong NGS annual recurring revenue growth.
“We also believe NGS trends are solid and believe large deals signed after last quarter closed, which could drive some improvement in the booking trends,” they wrote.
Shares of Palo Alto Networks traded hands at $317 on Friday morning. The stock is up 9.7% in the year-to-date.