Palo Alto Stock: A Strong Bet on FundamentalsBy: Christian Tharp, CMT
The Santa Clara-based cybersecurity company’s
revenue increased by 27% year over year to $509.1 million in the fourth quarter.
Deferred revenue in the quarter jumped 43%.
The massive rise in deferred revenue shows that Palo Alto’ strategy of focusing on subscription revenue is working.
The company also announced that it added a record number of new customers in the fourth quarter. Palo Alto stock also gave a solid guidance for the current quarter. Its guidance shows that the company expects its revenue to increase by 21 to 24%.
However, Palo Alto has a chronic problem of increasing expenses. Earnings plummeted by 20% in the quarter. The company has promised to cut its expenses in the coming quarters.
However, it is important to note than increased spending means more products and R&D. Palo Alto will launch its Next-Generation Security Platform next year.
The company will also release Application Framework in 2018. The SaaS framework will give customers access to Palo Alto’s cloud-based security services and APIs.
In October, investment firm Stephens increased its price target for Palo Alto stock from $155 to $165 and gave it an Overweight rating. The firm said in a report that Palo Alto’s execution and strategy remains strong.
In September, Maxim Group increased its price target for Palo Alto Networks from $168 to $195 and issued a Buy rating. Maxim’s analyst Nehal Chokshi said in a note that Palo Alto Networks is a “Best-in-Class” name in the industry.
Earlier this month, famous analyst Jim Cramer said in a program on CNBC that Palo Alto stock should be bought on the current weakness amid the upcoming quarterly report.
Cramer is bullish on the stock because he thinks cyber-security is an evergreen industry that will keep growing with the rise in cyber-attacks and digital threats.
Source: Tech Stock Sensei
http://techstocksensei.com/2017/11/palo ... -security/
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