Palo Alto Networks Analyst Roundup Following Fiscal Q1 Earnings

Palo Alto Networks Inc PANW reported fiscal Q1 results Monday and beat expectations.

The stock surged Tuesday, trading at $119.8, up 5.78 percent in the afternoon.

Below are highlights from analysts following the results along with current ratings and price targets. All those featured below raised their price target on the stock and remained bullish.

FBR - Outperform, $121 price target

“Last night, Palo Alto Networks reported solid F1Q15 (October) results that handily beat the Street's top-line, billings, and pro forma EPS estimates. We were also encouraged to see Palo Alto offer F2Q15 (January) top-line guidance that was above Street expectations as we believe customers continue to move upstream in their purchases of the company's datacenter security solutions with healthy cybersecurity spending, a strong subscription business, and a good product cycle adding tailwinds in the field. We maintain our Outperform rating and raise our price target from $105 to $121 (multiple of 9x our FY16E EV/revenue) to reflect our raised top-line estimates and solid execution in the field.”

Oppenheimer - Outperform, $120 price target

“PANW reported strong F1Q15 results, handily besting all financial metrics across all product lines and geographies. Of special note were billings, growing 52.3 percent year over year to $240.5M (vs. the Street's $223M estimate) and telling the true story of strong demand. Multiple factors support our bullish view: 1) strong high-end appliances traction (PA-7050), 2) recurring subscription revenue growth of 76 percent YoY to $43.7M, 3) improved F2Q guidance, and 4) reaffirmed commitment to exiting FY16 with operating margins in the low 20 percent area (reported 10.6 percent this quarter). We are raising FY15 estimates and are reiterating our Outperform rating and $120 price target.”

Topeka - Buy $130 price target

“We are reiterating our Buy rating following as expected, very solid 1QF15 results which prompts us to raise our price target to $130 from $120. We remind investors that while revenue growth carries an obvious importance, the investment case is built around a doubling of operating margins over the next seven quarters. The 250bps QoQ OPM improvement in 1QF15 is a big step in the right direction.”

Credit Suisse - Outperform, $135 price target

“[Our] thesis [is] that the company is positioned to continue to gain market share given the many unique advantages of its next-generation firewall platform, and, as such, we are increasing our target price from $110 to $135. We believe that Palo Alto Networks' unique technology platform and long-term corporate strategy, as well as management's ability to execute its vision, position the company to continue to gain share in the network security market—driving strong, sustained revenue and earnings growth. Furthermore, we believe that the increased adoption of software-defined networking could broaden the network security market by securing East-West traffic in the datacenter.”

Stifel - Buy, $120 price target

“We are raising our target price on shares of PANW to $120 from $110. Our target price is based on an 8.4x EV/FY16E sales multiple. Risks to our target price include increased competition from legacy entrenched vendors, including Check Point, Dell (SonicWALL), and Cisco. In addition, a decline in subscription and support renewal rates would negatively impact growth while a slowdown in new customer adoption could also weaken future growth opportunities.”

Citi - Neutral, $112 price target

“It is hard to call the quarter anything other than “best in class” in security space, but stock has had a huge run and reflects good fundamentals. Q1 looks more like the first nine months of FY14 rather than “blow-out” Q4. We expect it needs to become clearer the company can achieve target profitability and / or be successful in end-point as another leg of growth to take stock higher. We slightly raise our 2015 FCFs and thus PT to $112, at 26x discounted back.”

Deutsche Bank - Buy, $125 price target

“We are raising our PT to $125 from $100 given the strong revenue and billings momentum. The only real negative was that product license revenues were up 34 percent, short of our 37 percent estimate and down from 52 percent growth last quarter, and were up 2 percent sequentially compared to 15 percent sequential growth last year. We’re reluctant to over-react to this miss, given that PANW made up for it with very strong subscription and maintenance services growth, and because the sequential compare was so tough given blow-out 4QFY14 numbers (there could have been some pull-forward in 4QFY14). The only other negative was that product GM of 75.1 percent was down 150bps y/y, which PANW blamed on investments in manufacturing operations. “