Palo Alto Networks Still A 'Best-In-Breed Security Vendor' After Mixed Results, Reviews

Shares of Palo Alto Networks Inc (NYSE: PANW) were down more than 12.3 percent on Friday trading following the announcement of strong third-quarter results and relatively weak guidance Thursday afternoon. However, not all analysts were as bearish as the market.

In a report issued Friday, Nomura analyst Frederick Grieb issued a Buy rating and $200 price target on the shares.

A Look Into The Results

Below are the most important figures from Palo Alto’s third-quarter earnings report, as per Nomura experts.

Related Link: Benzinga Breakdown: Analysts Give Palo Alto More Mixed Reviews Than 'Batman V Superman'

The company posted product revenue of $162.1 million, below consensus of $165.6 million. On the other hand, services revenue of $183.7 million, beat estimates of $173.9 million. Services comprised 53 percent of Palo Alto’s total revenue as more users shift towards subscription based offerings.

A Look Forward

The Street has been quite worried about a slowdown in security spend recently, the analysts noted, citing the touch compares created by the spectacular growth seen last year and the fade-out of the “emergency” spend derived from a few public breaches.

Given that Palo Alto is a best-in-class security vendor, Nomura experts anticipate that its lukewarm results will probably be “read across negatively to the security software group.”

Having said this and issued a Buy rating, the analysts remain positive on Palo Alto and its well-rated product offering and consistent, proven ability to post share gains.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.