Palo Alto Networks Stock Dives On Earnings, Buying Opportunity?

Palo Alto Networks’ (NASDAQ:PANW) third-quarter fiscal year 2024 financial results bested market expectations, but stocks sunk during post-market trading on lowered billings’ guidance.

 

The Santa Clara, Calif.-based cybersecurity company tumbled 8% after its latest financial results and outlook was issued after the market closed on Monday.

 

For the quarter, Palo Alto reported non-GAAP earnings per share of $1.32 versus the consensus of $1.25 and total revenue of $2B versus the consensus of $1.97B.

 

Looking ahead, Palo Alto Networks expects fourth quarter earnings per share of $1.40 to $1.42, which is nearly in-line with the estimate of $1.42. Total revenue expectations for the quarter range from $2.15B to $2.17B, which is also close to the estimate of $2.17B.

 

Billings for fiscal year 2024 are now expected to range from $10.13B to $10.18B, which represents year-over-year growth of 10% to 11%. In February, the company lowered its full-year revenue and slashed its FY24E billings guide by $600M. The billings’ guidance issued at that time for the year ranged from $10.1B to $10.2B.

 

However, guidance for non-GAAP earnings per share for the year increased since February. Palo Alto now expects annual earnings per share to range from $5.56 to $5.58 versus its previous forecast of $5.45 to $5.55.

 

“We are pleased with the enthusiastic response to platformization from our customers in Q3,” said Palo Alto CEO Nikesh Arora. “Platformization is a long-term strategy that addresses the increasing sophistication and volume of threats, and the need for AI-infused security outcomes.”

 

Rival cybersecurity stocks such as CrowdStrike (CRWD) and Fortinet (FTNT) both dipped 2% during early post-market trading.

With that said, this happens often with PANW, and we view the dip as a buy. There are more and more hacks, and on Jim Cramer’s Mad Money the CEO revealed another insurer was hacked, essentially breaking that news. We think this is an opportunity to scoop some on weakness.