Palo Alto Stock Sparks Retail Chatter Amid Wall Street’s Wave Of Price-Target Hikes After Earnings Beat

Shares of Palo Alto Networks, Inc. ($PANW) attracted significant retail investor attention early Thursday, following a solid fiscal first-quarter (Q1) earnings report that exceeded Wall Street expectations. 

The cybersecurity company reported Q1 earnings of $350.7 million, rising about 80% from $194.2 million a year earlier. Adjusted earnings were $1.56 per share, topping the consensus estimate of $1.48.

Revenue for the quarter increased by 15% to $2.1 billion, slightly missing the $2.12 billion forecast but in line with the company’s prior guidance. 

CEO Nikesh Arora highlighted the growing market recognition of Palo Alto’s “platformization” strategy, which he believes is positioning the company for sustained growth in AI and cybersecurity. 

The company also announced a 2-for-1 stock split, with split-adjusted trading beginning on Dec. 16.

Despite the strong earnings, there were some concerns. Billings fell 14%, missing expectations, and the raised earnings-per-share (EPS) guidance for the fiscal year was only in line with projections, as per MarketWatch. 

As a result, the stock dropped nearly 3% in premarket trading.

However, the earnings beat spurred multiple price-target hikes and analyst upgrades. 

Truist, maintaining its ‘Buy’ rating, raised its price target to $425, citing strong annual recurring revenue (ARR) growth and the solid performance of Palo Alto’s next-gen products. 

Rosenblatt upgraded the stock to ‘Buy’ from ‘Neutral’ with a price target of $430, driven by impressive growth in Next-Generation Security and strong momentum in its platform strategy.

Wells Fargo raised its target to $450, noting concerns about the billings miss but expressing confidence in the company’s long-term prospects, especially given its free cash flow performance.

Wedbush maintained an ‘Outperform’ rating with a $400 price target. “While we believe the stock negative initial reaction was overblown, we believe PANW’s efforts on platformization are just beginning to hit its stride as it generates a more stable pipeline of … deals with cloud penetration still acting as a major driver going forward,” the brokerage said. 

PANW sentiment and message volume on Nov 21 pre-market as of 8:45 am ET. | source: Stocktwits

On Stocktwits, sentiment was ‘extremely bullish’, accompanied by a spike in message volume, indicating that retail investors were buying the dip amid premarket weakness.

The stock was among the top 20 trending symbols on the platform as of 8:45 am ET.

Palo Alto’s stock has more than doubled this year, significantly outperforming its competitor, Crowdstrike Holdings Inc. ($CRWD), which has gained a more modest 40% after facing a major setback with a faulty software update in July that impacted millions of users.