Cybersecurity company Palo Alto Networks (PANW) is scheduled to announce its results for the third quarter of Fiscal 2025 after the market closes on Tuesday, May 20. PANW stock has risen 6% so far this year, with several analysts seeing cybersecurity stocks as safer bets due to the growing cyber attacks and the AI (artificial intelligence) boom. Wall Street expects Palo Alto to report EPS (earnings per share) of $0.77 for Q3 FY25, reflecting a year-over-year growth of about 17%.
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Analysts project revenue to grow 15% to $2.28 billion in the fiscal third quarter. Palo Alto has been gaining from its platformization strategy, under which it has been consolidating different products and services into a single platform to make more customers use its products and services. This strategy is driving bigger deals and higher annual recurring revenue (ARR) per customer.
Analysts’ Views Ahead of Palo Alto’s Q3 Earnings
Heading into the Q3 FY25 results, TD Cowen analyst Shaul Eyal reiterated a Buy rating on Palo Alto stock with a price target of $230. The 5-star analyst noted that Palo Alto is seeing a rebound in demand for its Next-Generation Security (NGS) offerings, as indicated by recent positive results from industry peers like Check Point Software Technologies (CHKP) and Fortinet (FTNT). Eyal believes this indicates a broader market shift towards a firewall refresh cycle, driving demand for Palo Alto Networks’ hardware firewall products and the overall network security segment.
Further, Eyal highlighted Palo Alto Networks’ strategic focus on ARR and its recent acquisition of Protect-AI, a security-related AI modules company. The analyst expects this acquisition to enhance PANW’s new Prisma AIRS platform, enhancing its competitive edge. He added that the reaffirmation of FY25 guidance and the company’s long-term ARR target of $15 billion also support his bullish thesis.
Meanwhile, Jefferies analyst Joseph Gallo increased the price target for Palo Alto Networks stock to $225 from $215 and reaffirmed a Buy rating. The 5-star analyst sees the possibility of Palo Alto outperforming top-line metrics, driven by strength in product revenue. Gallo noted that so far, results in the cybersecurity space in calendar Q1 have seen limited macro pressure and strong product growth, mainly in enterprise, which should bode well for Palo Alto.
Options Traders Anticipate a Major Move on Palo Alto’s Q3 Earnings
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 about an 8% move in either direction in PANW stock in reaction to Q3 FY25 results.
Is PANW a Good Stock to Buy
Wall Street has a Moderate Buy consensus rating on Palo Alto stock based on 15 Buys and six Holds. The average PANW stock price target of $215.56 implies about 12% upside potential from current levels.
