Bank of American is Now Bullish on Palo Alto Networks for This Reason

Analysts at BofA have turned bullish on American multinational cybersecurity company Palo Alto Networks after it reported stellar first quarter financial results.

It was on Monday of this week that Palo Alto Networks not only beat expectations for Q1 but raised its guidance for the year.

According to BofA Securities, this solid guidance and enhanced disclosures suggest continued positive momentum. Palo Alto raised its fiscal 2021 guidance to 21% revenue growth, 18% billings growth and 18% earnings growth.

BofA analyst Tal Liani upgraded the stock from “neutral” to “buy” and raised the price target from $270 to $330.

In the note, Liani said the company reported revenue and earnings of $946 million and $1.62 per share versus Street expectations of $927 million and $1.33 per share, respectively, as well as strong billings of 20% year-over-year versus the consensus estimate of 16%.

“In our view, strong guidance and enhanced disclosures around Firewall-as-a-Platform and Next-Gen Security revenues point to positive momentum with new growth areas and increased visibility in the transition to Next-Gen products and newer consumption models,” said Liani.

“Despite previous concerns of Firewall slowdown, new segment breakdowns suggest the Network Security business is expected to generate $3.5bn in revenues in FY21 up 14% YoY, with healthy 77% gross margin, 29% operating margin, and strong 15% YoY billings growth,” the analyst added.

For the first quarter, CEO Nikesh Arora remarked on the earnings call, “Over the last seven months, I’ve been cautious on the pandemic and our teams have continued to deliver and surprise me to the upside. I’m delighted to report this is no longer a coincidence, our customers are investing, our teams are executing, and our strategy of innovating in our firewall business and focusing on the next generation of products around cloud and AI in the industry is working. As you can see, we had a great start to fiscal year 2021 as we exceeded guidance across all metrics in Q1.”

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.