Shares of Palo Alto Networks Inc (NASDAQ:PANW) tanked in early trading on Wednesday, after the company reported its fiscal fourth-quarter (Q4) results.
The company turned in a strong quarter and raised its guidance, but the stock had already climbed on high expectations heading into the print.
Part of the guidance beat stemmed from the acquisition of CyberArk, which closed in February, rather than organic growth alone. That dynamic likely prompted investors to sell shares even on an otherwise solid report.
Sell-side analysts, meanwhile, remained bullish on the stock following the results. Here are some of their key takeaways:
- RBC Capital Markets analyst Matthew Hedberg reiterated an Outperform rating, while raising the price target from $434 to $475.
- DA Davidson analyst Rudy Kessinger maintained a Buy rating, while taking the price target higher from $345 to $420.
- BTIG analyst Gray Powell reaffirmed a Buy rating, while lifting the price target from $380 to $404.
- Rosenblatt Securities analyst Catharine Trebnick reiterated a Buy rating, while raising price target from $355 to $415.
- Cantor Fitzgerald analyst Jonathan Ruykhaver reaffirmed an Overweight rating and price target of $425.
- Needham analyst Mike Cikos maintained a Buy rating and price target of $425.
Check out other analyst stock ratings.
RBC Capital Markets: Palo Alto Networks reported a strong quarter even against "elevated investor expectations," Hedberg said in a note. He highlighted the following:
- NGS ARR (next-generation security annual recurring revenue) of $9.1 billion, accelerated to 63% year-on-year
- NNARR (net new annual recurring revenue) of nearly $1 bilion.
- RPO (remaining performance obligation) of $21.2 billion, up 34% year-on-year
- Record net new platformizations of around 220
"We thought the quarter showed broad-based strength across all platforms, with recent acquisitions tracking ahead of plan as AI reshapes the threat landscape and could be a significant LT tailwind," the analyst wrote.
DA Davidson: Palo Alto Networks reported revenue, operating product and earnings of $3.410 billion, $1.011 billion and $1.03 per share, beating consensus estimates of $3.353 billion, $981.6 million and 98 cents per share, respectively, Kessinger said. While the company did not explicitly announce the inorganic contribution, organic NNARR seems to be "well ahead of expectations," he added.
With net new NetSec & Cortex platformizations of around 180, the total NetSec & Cortex platformizations were up 31% year-on-year to ~1,830, the analyst stated. Management guided to revenues and earnings for the first quarter of fiscal 2027 at $3.305 billion and 97 cents per share, higher than Street expectations of $3.211 billion and 94 cents per share, respectively.
BTIG: Palo Alto Networks reported total revenues ahead of estimates, with the upside driven "entirely" by better-than-expected product revenue growth, Powell said. The company’s network security business "looked strong across all components," he added.
Management guided fiscal 2027 revenue at a midpoint of $14.15 billion, 23% above Street estimates, the analyst stated. "On an organic basis, the outlook implies ~13.5% growth, which we think will prove conservative," he further wrote.
Rosenblatt Securities: Palo Alto Networks beat every guided metric in the fourth quarter, Trebnick said. RPO grew 34% to cross $20 billion for the first time, she added.
Management indicated that RPO growth accelerated for the second consecutive quarter on a pro forma basis, the analyst stated. "The standout was net new NGS ARR of roughly $970M in a single quarter, up 98% Y/Y, on a record ~220 net new platformizations to ~2,500 total," she further wrote.
Cantor Fitzgerald: Palo Alto Networks delivered another strong quarter, with organizations continuing to consolidate their security postures, Ruykhaver said. CyberArk continued to grow, with ACV (average contract value) growth accelerating to 27% year-on-year in the fourth quarter, he added.
"We believe cybersecurity consolidation remains in the early stages, with Gartner noting that 62% of companies are actively consolidating suppliers and another 36% plan to do so over the next three years," the analyst further wrote.
Needham: Palo Alto Networks showcased the role of its multi-platform approach in growing its overall business, Cikos said. He added that the initial fiscal 2027 guidance reflects:
- Low double-digits Network and AI Security growth
- Cortex revenue growth of around 30%
- Idira revenue of $1.5 billion
The NGS ARR guidance of $11.075-$11.175 billion reflects 22%-23% growth and assumes NNARR of around $450 million in the first quarter and 60%-61% growth in the back half of fiscal 2027, the analyst stated.
PANW Price Action: Shares of Palo Alto Networks had declined by 7.50% to $334.92 at the time of publication on Wednesday.
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