Cybersecurity company Palo Alto Networks (NASDAQ:PANW) will release its fiscal third-quarter results after the market closes on Monday, May 20. The company’s performance might have benefited from strong demand for cybersecurity solutions during the quarter. Additionally, PANW boasts an impressive track record of exceeding analyst estimates for 15 consecutive quarters, raising expectations for another potential beat.
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Investors should note that PANW stock has gained nearly 22% in the past six months, outperforming the Nasdaq 100 Index (NDX) rally of about 18% in the same period.
PANW – Q3 Expectations
Wall Street expects Palo Alto Networks to report sales of $1.97 billion in Q3, up about 14.5% year-over-year. Meanwhile, Wall Street analysts expect PANW to post earnings of $1.25 a share, up about 13.6% year-over-year.
Looking at management’s expectations, Q3 revenues are expected to be in the range of $1.95 billion to $1.98 billion, reflecting a year-over-year increase of 13% to 15%. Thanks to strong sales, PANW expects its adjusted EPS to be in the range of $1.24 to $1.26, up 13% to 15%.
Analysts Weigh In
Ahead of the company’s Q3 results, 11 analysts maintained a Buy rating on Palo Alto Networks stock. J.P. Morgan’s Brian Essex is optimistic about the company’s ability to capture a bigger share of the cybersecurity market. Moreover, he raised the price target on the stock to $340 (7% upside potential) from $330.
KeyBanc analyst Eric Heath also increased the price target to $384 (20.8% upside) from $355. The analyst is optimistic about the company’s Q3 performance, driven by solid demand for its cybersecurity solutions.
Strategic Acquisitions to Boost Market Share
According to the TipRanks Stock Analysis tool, “Bulls Say, Bears Say,” analysts bullish on the stock stated that the acquisition of IBM’s (NYSE:IBM) QRadar SaaS business could help PANW increase its market share.
Is PANW a Buy or Sell?
Overall, Wall Street is cautiously optimistic about the stock. PANW has a Moderate Buy consensus rating based on 29 Buy and 10 Hold recommendations. The analysts’ average price target on Palo Alto Networks stock of $335.32 suggests an upside of 5.5%.
Insights from Options Trading Activity
TipRanks presents options activity to help investors plan their trades ahead of earnings releases. Options traders are pricing in a +/- 10.22% move on PANW’s earnings, much lower than the previous quarter’s earnings-related move of -28.4%.
The anticipated earnings move is determined by computing the at-the-money straddle of the options closest to the expiration after the earnings announcement.
Learn more about TipRanks’ Options tool here.
Concluding Note
The company’s efforts to introduce new products and boost sales capabilities are encouraging. In addition, PANW’s focus on becoming the one-stop shop for cybersecurity looks promising for future growth.
Also, bullish analysts’ views and expectations of higher sales and earnings add to the positive sentiment surrounding PANW’s upcoming earnings release.
