Earnings Preview: Palo Alto Networks

After U.S. markets closed on Wednesday, Cisco Systems reported better-than-expected results on both the top and bottom lines. Revenue was up 16% year over year, and earnings per share (EPS) was 37% higher than in the year-ago quarter. The stock traded up 4.8% shortly after Thursday’s opening bell.

Sociedad Química y Minera de Chile (SQM) missed consensus estimates on both the top and bottom lines. Revenue was down 21% year over year in the quarter. Shares were trading down 1.9% in the early going.

StoneCo beat estimates on both the top and bottom lines. EPS for the quarter came in 9.3% better than expected and up 68% year over year. Revenue was up 28% year over year. The Brazilian fintech firm also issued upside guidance for third-quarter revenue. The stock traded down 6.5%. Quem sabe?

Before markets opened 0n Thursday, Walmart reported better-than-forecast EPS and revenue. EPS beat the Wall Street estimate by 7%, and revenue came in about 0.9% higher. Year over year, revenue was up 5.7% and EPS was up 4.0%. Walmart also raised full-year EPS guidance. Investors were not impressed. Shares traded up less than 1%.

Tapestry missed consensus EPS and revenue estimates. The luxury brand retailer also issued downside guidance. Shares traded up about 0.3%.

Applied Materials and Farfetch are on deck to report results after U.S. markets close on Thursday. Before markets open on Friday, look for reports from Deere and Xpeng.

Here is a preview of what analysts expect when Palo Alto Networks Inc. (NYSE: PANW) reports earnings after U.S. markets close on Friday. No notable reports are on the calendar for Monday morning.

Palo Alto Networks is a global supplier of cybersecurity platforms, including both hardware and software, along with a number of security and professional subscription services. Over the past 12 months, its share price has increased by more than 22%, thanks to a jump of more than 53% in 2023.

The unusual reporting time (Friday afternoon) could portend either especially good or especially bad news. Palo Alto Networks has yet to announce a generative AI program, even though it has used machine-learning technology for years. Could a generative AI security model be on its way?

Analysts, however, remain strongly bullish on the stock, with 38 of 43 brokerages having a Buy or Strong Buy rating. At a recent share price of around $214.00, the stock’s upside potential based on a median price target of $250.00 is 16.8%. At the high price target of $302.00, the upside potential is 41.1%.

For its fourth quarter of fiscal 2023, Palo Alto Networks is expected to report revenue of $1.96 billion, which would be up 13.8% sequentially and by 26.5% year over year. Adjusted EPS are forecast at $1.29, up 23.3% sequentially and 61.3% higher year over year. For the full fiscal year that ended in July, analysts are looking for EPS of $4.27, up almost 70%, and revenue of $6.9 billion, up 25.4%.

Palo Alto Networks stock trades at 50.1 times expected 2023 EPS, 43.2 times estimated 2024 earnings of $4.95 and 36.4 times estimated 2025 earnings of $5.88 per share. The 52-week trading range is $132.22 to $258.88, and Palo Alto Networks does not pay a dividend. Total shareholder return for the past 12 months was 22.37%.

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