Palo Alto Networks jumps as Wedbush says Q4 results show it's 'in the right spot at the right time'
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Palo Alto Networks (NASDAQ:PANW) surged on Tuesday after the cybersecurity company reported fourth-quarter results that topped expectations and issued guidance that seemed to assuage fears of a slowdown in the sector, prompting investment firm Wedbush Securities to note its "strong" momentum.
Analyst Dan Ives, who has an outperform rating and raised his price target to $620 from $580 following the results, noted that guidance came in above expectations, thanks in part to strong billings, and the company's cloud strategy is paying off.
"The shift to cloud is a massive tailwind for [Palo Alto] as the company is in the right spot at the right time to benefit from this multi-year wave of cyber security enterprise spending, despite an uncertain macro backdrop," Ives wrote in a note to clients.
Palo Alto Networks (PANW) shares gained more than 8.5% to $551.39 in premarket trading, while several other cybersecurity stocks rose in sympathy, including Zscaler (ZS), CyberArk (CYBR) and Fortinet (FTNT).
The Nikesh Arora-led Palo Alto (PANW) said first-quarter billings would be between $1.68B and $1.7B, while revenue is expected to be between $1.54B and $1.56B. Analysts are expecting billings of $1.74B and $1.54B in revenue.
For fiscal 2023, Palo Alto (PANW) expects sales to be between $6.85B and $6.9B, with earnings per share expected to be between $9.40 and $9.50 per share. Analysts are expecting the company to generate $6.76B in revenue and earnings of $9.30 per share.
Palo Alto Networks (PANW) also said it would split its stock three-for-one and it will buy back up to $915M in stock.
In addition, Ives noted that the results were a "another major positive data point" for the sector, which he said is in the midst of a "massive growth cycle" over the next few years, as geopolitical tensions continue to rise.
Earlier this month, investment firm Wedbush Securities listed Palo Alto Networks (PANW) among its top three tech stocks going into the end of the year.