Shares of Palo Alto Networks (PANW) are down in after-hours trading after the cybersecurity company reported earnings for its second quarter of Fiscal Year 2025. Earnings per share came in at $0.81, which beat analysts’ consensus estimate of $0.78 per share. In addition, sales increased by 14.1% year-over-year, with revenue hitting $2.26 billion. This also beat analysts’ expectations of $2.24 billion.
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The company’s Q2 results were driven by the success of its platformization strategy, according to CFO Dipak Golechha, which is a strategy that involves creating a central platform that integrates multiple products and services into a seamless customer experience.
This led to strength in Next-Generation Security Annual Recurring Revenue and Remaining Performance Obligations. As a result, Palo Alto Networks delivered profitable growth and saw early benefits from AI-related efficiency initiatives.
PANW’s Guidance for 2025
Looking forward, management now expects revenue and adjusted earnings per share for Q3 2025 to be in the ranges of $2.26 billion to $2.29 billion and $0.76 to $0.77, respectively. For reference, analysts were expecting $2.27 billion in revenue along with an adjusted EPS of $0.76.
For Fiscal Year 2025, revenue is expected to land between $9.14 billion and $9.19 billion compared to estimates of $9.15 billion. Furthermore, the firm anticipates earnings per share of $3.18 to $3.24 versus expectations of $3.17 per share.
Although Palo Alto’s earnings and guidance exceeded expectations, the reason why shares saw a slight decline in after-hours trading is likely due to the company’s valuation. Indeed, it is likely that its current price-to-earnings ratio of 51x was already pricing in a beat, especially since shares rallied into the earnings release.
What Is the Price Target for PANW?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on PANW stock based on 30 Buys, six Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 9% rally in its share price over the past year, the average PANW price target of $213.30 per share implies 6.1% upside potential. However, it’s worth noting that estimates will change following today’s earnings report.
