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Palo Alto Estimates Expected To 'Tick Up' At BTIG

Palo Alto Networks Inc PANW reported its Q4 results broadly in-line with expectations, while the guidance for FY17 could prove conservative, BTIG’s Joel P. Fishbein said in a report. He maintained a Buy rating on the company, with a price target of $210.

While Palo Alto’s revenue guidance for FY17 came in-line with the current Street estimates, the company’s full-year organic op margin expansion target was announced at +100bps y/y, at the low-end of its target range of 100-200bps.

These targets could prove conservative, and estimates may be revised upward “as customers continue embracing the breadth of the Palo Alto platform,” analyst Fishbein commented.

Convincing Performance

Palo Alto has generated double-digit growth in ARPUs [average revenue per user] for five consecutive quarters. Moreover, the company achieved a record number of quarterly customer adds in its history. Given such a performance in Q4, “we remain steadfast in our conviction that Palo Alto is a name to own in the current security cycle,” Fishbein stated.

Naming lifetime value and renewal rates as being hallmarks of a successful platform, the analyst mentioned that Palo Alto had exhibited “exceptional progress on both fronts.” Referring to concerns around Palo Alto’s full-year guidance, Fishbein noted that FCF was “the true yardstick by which to measure the company,” and that this was expected to inflect further, as “new reps ramp to full productivity over the next twelve months.”

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DateFirmActionFromTo
Aug 2016RBC CapitalMaintainsOutperform
Aug 2016NomuraMaintainsBuy
Aug 2016Goldman SachsMaintainsBuy

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