By Senad Karaahmetovic
Shares of Palo Alto Networks (NASDAQ:PANW) are up over 11% in premarket trading after the company issued an upbeat FQ4 adjusted EPS guidance.
For the third quarter, PANW reported an adjusted EPS of $1.79, compared to $1.38 in the year-ago period and above the analyst consensus of $1.68. Revenue came in at $1.39 billion, up 29% YoY and topping the estimated $1.36 billion.
Looking ahead to Q4, the company expects adjusted EPS in the range of $2.26 to $2.29, beating the consensus projection of $2.22 per share. PANW expects Q4 revenue of $1.53 billion to $1.55 billion, compared to the analyst estimates of $1.53 billion. Billings are expected to range between $2.32 billion and $2.35 billion, while analysts were looking for $2.25 billion.
On a full-year basis, PANW expects adjusted EPS in the range of $7.43 to $7.46, up from the previous forecast of $7.23 to $7.30, and topping the expected $7.29 per share.
The company expects FY revenue in the range of $5.48 billion to $5.50 billion, up from the earlier forecast of $5.43 billion to $5.48 billion, and compared to the analyst expectations of $5.46 billion.
"On the back of this strength across our portfolio, we are again raising our guidance for the year across revenue, billings and earnings per share,” the company said.
BMO (TSX:BMO) analyst Keith Bachman remains very positive on PANW after results, although the analyst cut the price target to $615.00 per share from $685.00 to reflect lower multiples.
“We think PANW can sustain high 20% FCF growth over the next few years. Further, we believe investors will continue to prefer stocks with valuation frameworks based on reasonable FCF multiples, rather than on growth stories with weak margins/FCF. Hence, we comfortably reiterate our Outperform rating and top pick designation for PANW,” Bachman said in a client note.
Similarly, Mizuho analyst Gregg Moskowitz reiterated a Buy rating on PANW and a Top Idea designation.
“We remain very constructive on the improving mix shift toward higher-growth recurring revenue, and we reiterate our view that PANW easily possesses the strongest array of cloud assets among traditional network security vendors. PANW remains one of our top picks,” the analyst told clients.