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Monday, November 30, 2020

Wild Action Continues in Palo Alto Networks Inc (NYSE:PANW)

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Palo Alto Networks Inc (NYSE:PANW) shares were shattered on Tuesday after strong billings were offset by a big 10% miss on product revenue (down 4% yr/yr). Shares of the stock are now testing key support at the confluence of the major moving averages.

In all, the company reported Q1 results, topping consensus for EPS on in-line revs (+17.7% yr/yr to $772 mln). Billings increased +18% yr/yr, surpassing co’s guidance. The company commented that its product category did not meet its expectations in the quarter, weighing on Firewall as a Platform. Product revs declined 4% yr/yr to $231.2 mln. PANW also announced that it will acquire machine identity-based microsegmentation company Aporeto for $150 mln in cash.

Palo Alto Networks Inc (NYSE:PANW) promulgates itself as a security platform solutions worldwide.

The company provides firewall appliances and software; Panorama, a security management solution for the control of appliances deployed on an end-customer’s network as a virtual or a physical appliance; and Virtual System Upgrades, which are available as extensions to the virtual system capacity that ships with physical appliances.

It also offers subscription services covering the areas of threat prevention, uniform resource locator filtering, malware and persistent threat, laptop and mobile device protection, and firewall, as well as cyber-attack, threat intelligence, and content control.

In addition, the company provides support services; and professional services, including application traffic management, solution design and planning, configuration, and firewall migration, as well as online and classroom-style education training services.

Palo Alto Networks, Inc. sells its products and services through its channel partners, as well as directly to medium to large enterprises, service providers, and government entities operating in various industries, including education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications. The company was founded in 2005 and is headquartered in Santa Clara, California.

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As noted above, PANW just announced a big 10% miss on product revenue (down 4% yr/yr).

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action PANW shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -11% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities.

What’s more, the name has registered increased average transaction volume recently, with the past month seeing greater than 130% over what the stock has registered over the longer term.

PANW has a significant war chest ($2.8B) of cash on the books, which is balanced by about $2.1B in total current liabilities. One should also note that debt has been growing over recent quarters. PANW is pulling in trailing 12-month revenues of $2.9B. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 22.4%. As more color becomes clear on the name, we will review the situation and update our take. Sign-up for continuing coverage on shares of $PANW stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $PANW, either long or short, and we have not been compensated for this article.

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