Palo Alto Networks: Color on Qtr (142.53)
- Monness Crespi Hardt maintains Buy rating and is increasing it's price target to $170 from $155. PANW delivered a solid F1Q, underpinned by outperformance in product revenue and reflective of momentum in the hardware cycle. Against the backdrop of what it views as a broken consumption model in security, PANW has made a strong case for its application-based platform to lead the company through the next evolution in security. Newer subscriptions continue to gain traction, the sales reorganization is nearing completion, the CFO overhang has been removed and ongoing buybacks offer modest support. As customers make architectural decisions and sales execution continues to improve, firm thinks growth metrics are likely to accelerate, driving multiple expansion and additional market share gains.
- Maxim Research Group notes product refresh continues to drive beats, but power of platform is evident from ongoing increases in subscription revenue to installed base ratios. Management stated that software subscription attachment rates increased y/y, and supporting that claim is that subscription revenue of $169M increased 9% q/q, (up 40% y/y). Additionally, DSOs were 54 days, down 7 days y/y, which is indicative of a quarter that was not as back-end loaded as the year-ago period; a positive. These data points combined with the Investor Day data show that PANW generates 4x-9x higher revenue per customer which continues to indicate that PANW is the best-in-class cybersecurity platform today that goes well beyond being just a firewall product company. In-line guidance likely conservative and rates of sales productivity deterioration poised to continue moderating.
Shares of PANW are up approx 6% in early morning trade; Stock hit an after hour high of $154.90 at approx 6:10am ET after seeing resistance at $153 in yesterday's after hours.