Cybersecurity firm Palo Alto Networks (PANW) is set to report its Q1 earnings results on November 19 after the market closes. Analysts are expecting earnings per share to come in at $0.89 on revenue of $2.46 billion. This compares to last year’s figures of $0.78 and 2.14 billion, respectively.
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Ideally, earnings per share should grow faster than revenue, as that would demonstrate a high degree of operating and financial leverage in the business. Nevertheless, it’s worth noting that Palo Alto has beaten earnings estimates every quarter since its 2021 Q4. Therefore, it’s possible that EPS growth can still outpace revenue growth.
In addition, Palo Alto’s revenue mostly comes from subscriptions, which allows it to have steady and fairly predictable growth. It’s also worth noting that subscriptions have been growing consistently over the past several years, as pictured below.
Options Traders Anticipate a Large Move
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you. Indeed, it currently says that options traders are expecting a large 7.7% move in either direction.
What Is the Price Target for PANW?
Turning to Wall Street, analysts have a Strong Buy consensus rating on PANW stock based on 29 Buys, six Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average PANW price target of $227.50 per share implies 12.1% upside potential. Separately, TipRanks’ AI analyst has an Outperform rating with a $244 price target.
