Can Palo Alto Networks Ovecome a Cut in Customer Tech Spending?

Cybersecurity company Palo Alto Networks (PANW) slumped more than -25% today to a 2-1/2 month low after the company cut its annual revenue forecast late Tuesday, fueling concerns that customers are reigning in on technology spending.  The company cut its full-year revenue forecast to $7.95 billion-$8.00 billion from a previous estimate of $8.15 billion-$8.20 billion, weaker than the consensus of $8.18 billion. 

The company’s revenue outlook suggests that customers may be cutting back on cybersecurity spending, even as online attacks proliferate.  The top end of Palo Alto Networks’ annual sales forecast represents an increase of +16%, well below the 25%-plus growth rate of recent years.  Shares of Pala Alto Networks had risen +24% this year as of Tuesday, outperforming most tech stocks, with investors and analysts betting that cybersecurity investments would continue to increase.