Palo Alto Networks Q2 Preview: 10th Straight Double Beat Expected — Will That Reverse Stock Slump?
Palo Alto Networks Inc (NASDAQ:PANW) is set to report its second-quarter results after Tuesday's close, with analysts and investors eyeing growth through acquisitions, key earnings estimates, and ratings.
Palto Alto Networks Q2 Earnings Estimates
Analysts expect Palo Alto Networks to report Q2 revenue of $2.58 billion, up from $2.26 billion, according to Benzinga Pro.
The company beat analyst estimates for revenue in nine straight quarters.
Analysts expect Palo Alto Networks to report Q2 earnings per share of 76 cents. That’s down from 81 cents per share in last year's second quarter.
The company beat analyst estimates for earnings per share in more than 10 straight quarters.
Company guidance calls for revenue of $2.57 billion to $2.59 billion and earnings per share of 93 to 95 cents per share.
Palo Alto Networks Analyst Ratings
Analysts have been lowering their price targets on Palo Alto Networks ahead of quarterly results. Here are some of the recent analyst ratings on Palo Alto Networks stock and their price targets.
- Mizuho: Maintained Outperform rating, lowered price target from$220 to $205
- BTIG: Maintained Buy rating, lowered price target from $248 to $200
- DA Davidson: Maintained Buy rating, lowered price target from $240 to $210
- JPMorgan: Maintained Overweight rating, lowered price target from $235 to $225
- Barclays: Maintained Overweight rating, lowered price target from $235 to $225
Key Items to Watch in Q2 Earnings
Ahead of the company's quarterly earnings, Palo Alto Networks announced plans to acquire Koi, an agentic endpoint security company. The acquisition announced Tuesday comes with the rise of agentic AI and new AI-powered tools.
"Traditional security was built to stop malicious files, but modern AI agents and tools can actively read, write, and move data," the company said.
Palo Alto Networks said agentic endpoint security is a new blind spot in the cybersecurity field.
"By acquiring Koi, we will be closing this gap and setting a new standard for endpoint security," Palo Alto Networks Chief Product & Technology Officer Lee Klarich said.
The company is likely to share more details of this acquisition during the conference call after earnings. The latest deal comes with Palo Alto Networks recently completing several other acquisitions.
The company completed its acquisition of Chronosphere on Jan. 29 and its acquisition of CyberArk on Feb. 11.
The latest quarterly results won't include the full impact of those deals, but investors could get an update on how they are progressing if the company updates its guidance to reflect their closure.
‘Security Partner Of Choice’
Palo Alto Networks CEO Nikesh Arora previously said these deals will help position the company to be "the data and security partner of choice in the AI era."
Key areas investors may be centering in on in the second quarter results are remaining performance obligations and annual recurring revenue. Both of these figures were up over 20% year-over-year in the first quarter and investors and analysts may be expecting more strength ahead.
Shares of the cybersecurity stock have fallen over the last year and investors will be watching to see if another earnings double beat and strong guidance can provide more optimism, alongside recent acquisitions.
The earnings report could also put cybersecurity-related ETFs in the spotlight. Palo Alto Networks stock is the second-largest holding in the First Trust Nasdaq Cybersecurity ETF (NASDAQ:CIBR) at 7.68% of holdings. The stock is also the seventh-largest holding in the Amplify Cybersecurity ETF (NYSE:HACK), accounting for 5.13% of assets.
Palo Alto Networks Stock Price Action
The company’s stock is down 3.4% to $161.24 on Tuesday versus a 52-week trading range of $144.14 to $223.61. Palo Alto Networks stock is down 22.6% over the last 52 weeks.
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