After Palo Alto Networks Posts Q4 Beat, BofA Eyes 2021 Guidance

Despite strong fourth-quarter results and exceptional billings growth, Palo Alto Networks Inc (NYSE: PANW) guided to flat-to-down product growth in fiscal 2021, according to BofA Securities.

The Palo Alto Networks Analyst: Tal Liani maintained a Neutral rating on Palo Alto Networks and raised the price target from $255 to $270.

The Palo Alto Networks Thesis: While the company executed well during the fourth quarter, much of its strength is already reflected in expectations and the share price, Liani said in a Tuesday note. (See his track record here.)

Palo Alto Networks reported revenue and earnings of $950 million and $1.48 per share, beating the Street estimates of $924 million and $1.39 per share, respectively.

The company achieved impressive billings growth, with total billings growth accelerating from 17% year-on-year in the second quarter to 32% in the fourth quarter.

Next-gen security billing grew 86%, while billings in the core Firewall Platform business accelerated 19%, the analyst said.

“Overall, the results show continued transition to new form factors and growth areas like Cortex XDR and Prisma Cloud/Access.”

Liani expressed concern regarding the lack of clarity in organic versus acquired growth and the in-line billings guidance for the first quarter and fiscal 2021.

BofA's price target revision reflects the progress in the company's transition away from appliances, the analyst said. 

PANW Price Action: Shares of Palo Alto Networks were trading lower by 1.53% at $263.37 at the time of publication Tuesday.

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