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What to Watch For on Palo Alto Networks Stock After Post-Earnings Plunge | #hacking | #cybersecurity | #infosec | #comptia | #pentest | #ransomware


Key Takeaways

  • Palo Alto Networks shares fell nearly 9% in extended trading Monday after the cybersecurity firm issued a lackluster current-quarter and full-year outlook.
  • The company’s muted guidance has raised concerns about its recent move to a consolidated cybersecurity platform aimed at driving growth among cautious enterprise customers.
  • Palo Alto Networks shares find a zone of support between $281 and $295 from the 50-day moving average and price action over the past five months.

Shares in Palo Alto Networks (PANW) slumped nearly 9% late Monday after the cybersecurity firm issued a lackluster current-quarter and full-year outlook, but the stock may find buying interest near a key zone of chart support.

Since retracing to the 200-day moving average (MA) in early April, Palo Alto Networks shares have trended cautiously higher, with the price crossing above the 50-day MA later that month. Trading volumes have increased over the past week, indicating bullish momentum leading into the company’s quarterly results. However, that positive sentiment looks set to end abruptly on Tuesday after the firm’s lackluster outlook. 

Amid earnings-related selling, investors should monitor a region on the chart between $281 and $295, an area where the price finds a zone of support from the 50-day MA and prior price action over the past five months.

The stock finished after-hours trading at $295.61, an 8.7% decline from the end of the regular session.

Lackluster Outlook Fails to Impress

For the fiscal fourth quarter ending in July, the Silicon Valley-based company guided revenue of $2.15 billion to $2.17 billion, with the $2.16 billion midpoint matching analysts’ forecast. It sees billings in the period, which account for deferred revenue, coming in between $3.43 billion and $3.48 billion, compared to expectations of $3.45 billion.

For the full fiscal year, the company kept its billings guidance relatively unchanged, expecting it to range from $10.13 billion to $10.18 billion, compared to its earlier forecast of $10.10 billion to $10.20 billion.

In an effort to pursue growth amid cautious enterprise spending on cybersecurity solutions, the company recently pivoted to a consolidated security platform, offering a range of initiatives, such as free product offers, to entice corporate signups.

“Minor full-year FY24 guidance revisions failed to indicate a meaningful upswing in momentum, and the downstream benefit of increasing platform buy-in from large customers remains to be seen. This was echoed by lackluster guidance for the Q4 FY24 period,” Third Bridge analyst Jordan Berger told Reuters.

For the three-month period ending April 30, the cybersecurity giant posted adjusted earnings of $1.32 per share on net sales of $1.98 billion. Both metrics topped forecasts, which analysts had pegged at $1.25 a share and $1.97 billion, respectively. However, billings in the period of $2.33 billion slightly missed the $2.34 billion consensus.

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As of the date this article was written, the author does not own any of the above securities.

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