Palo Alto Networks stock soared 15% Monday, as fears about the cybersecurity firm's unusual Friday night earnings release turned out be "much ado about nothing," as one analyst put it.
The unusual decision to announce fiscal fourth-quarter earnings after the market close on the week's last trading day ignited angst on Wall Street leading up to the release. Potentially offsetting those concerns: Palo Alto reported adjusted earnings of $1.44 per share for the quarter ending July 31. Analysts polled by FactSet expected earnings of $1.29 per share.
Palo Alto's $1.95 billion in revenue for the quarter was up 26% from the same period last year. But it fell just short of analyst expectations for $1.96 billion.
But analysts liked the longer-term outlook the company gave. It projected compound annual growth rate for revenue of 18% at the midpoint of its range.
As a result, Evercore ISI analyst Peter Levine raised his target price to 295 from 240. He also kept an overweight rating on PANW stock.
PANW stock jumped by more than 12% in after-market trading following earnings on Friday. Shares surged 14.8% during the regular session on the stock market today to finish at 240.81.
Palo Alto Stock: Falling Ahead Of Earnings
Palo Alto was the first S&P 500 company to release earnings after market on a Friday in nearly three years, according to MarketWatch. The unusual timing caused a great deal of speculation and angst over what the company would say. PANW stock had fallen 16% between Friday and when the company announced its earnings plan, Aug. 2.
"It's clear investors will continue to reward those that can deliver profitable growth, operating leverage, and greater cash flow generation in this market, but the after-hour move had more to do with the optics and negative sentiment of those expecting to hear the worst-case scenario," Evercore ISI's Levine said in a note to clients. Those fears were ultimately much ado about nothing, he declared in his report.
On top of the unusual timing, Palo Alto officials told analysts to expect a two-hour earnings call.
"Our choice of Friday has definitely made us the topic du jour these past two weeks and has made for some very interesting reading of all the analyst notes," said Nikesh Arora, Palo Alto's chairman and chief executive, on the earnings call.
Arora added: "We apologize to people who are inconvenienced, but as we had mentioned in our press release, we want to give ample time to analysts to have one-on-one calls with us over the weekend and we have a sales conference that kicks off on Sunday."
PANW Stock: Earnings Give Cyber Competitors a Lift
Wells Fargo analyst Andrew Nowinski also raised the price target on PANW, up to 270 from 265.
"Management provided new medium-term targets, which were actually all better than expected," Nowinski wrote. "They also explained how AI is transforming the security market, and how Palo Alto will leverage its platform to ultimately provide real-time security outcomes for customers."
Several other cybersecurity stocks were rising Monday at marketing opening: Rival Fortinet gained 2.2% to 58.39; Zscaler surged 4.8% to 142.78 and Crowdstrike climbed 4.8% to 153.90.
Palo Alto stock is the highest ranked among the 35 companies in the computer-software security group, according to IBD Stock Checkup. Shares hold a strong IBD Composite Rating of 98, and Relative Strength Rating of 90.
