Analyst: How Is Palo Alto Setting Up Before Q1 Earnings?

Security software vendor Palo Alto Networks Inc PANW has been a fundamentally sound company, capitalizing on the necessity to protect networks from security breaches.

The company is scheduled to release its fiscal first quarter results after the close Monday, Nov. 20. 

The Analyst

KeyBanc Capital Markets analyst Rob Owens previewed the earnings report in a Sunday note. KeyBanc has an Overweight rating and $170 price target for Palo Alto Networks. 

The Thesis

No "usual" end-of-quarter behavior out of Palo Alto Networks was noted that would suggest any air of desperation, Owens said. (See Owens' track record here.) 

Palo Alto carried a "reasonable deal" of backlog into the first quarter, had a "strong" federal quarter and was able to execute on its large-deal pipeline, the analyst said. 

KeyBanc expects results and forward guidance to be in-line with expectations, given that Palo Alto was conservative in setting its Q1 and fiscal 2018 expectations.

KeyBanc proejcts revenues of $490 million for the Q1, representing 23.1 percent year-over-year growth, earnings per share of 69 cents and free cash flow per share of $2.11. This compares to consensus expectations, which call for revenues of $489.3 million and earnings per share of 69 cents.

"Competitor checks have been mixed, but we believe our checks point to an in-line result," Owens said. 

"Given the recent performance in shares, we believe this will be met positively and would be buyers."

The Price Action

Palo Alto Networks shares have added 15.16 percent year-to-date.

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