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Valued at a market cap of $116.2 billion, Palo Alto Networks, Inc. (PANW) provides cybersecurity solutions and network security solutions to enterprises, service providers, and government entities. The Santa Clara, California-based company’s network security gateways protect customer data, reduce security complexities, and lower total cost of ownership. It is expected to announce its fiscal 2025 Q2 earnings results on Tuesday, Feb. 18.
Ahead of this event, analysts expect the cybersecurity company to report a profit of $0.42 per share, up 5% from $0.40 per share in the year-ago quarter. The company has a solid track record of consistently beating or meeting Wall Street's bottom-line estimates in the last four quarters. The company’s bottom line figure of $0.41 per share perfectly aligned with Wall Street’s forecasted figure in its most recent quarter.
For fiscal 2025, analysts expect PANW to report an EPS of $1.74, up 16% from a profit of $1.50 in fiscal 2024.
Shares of PANW have gained 7.3% over the past 52 weeks, massively underperforming both the S&P 500 Index's ($SPX) 26.5% rise and the Technology Select Sector SPDR Fund’s (XLK) 22.1% return over the same time frame.
PANW’s shares gained 1.2% following its fiscal 2025 Q1 earnings release on Nov. 20. The company delivered better-than-expected Q1 adjusted EPS of $1.56 and revenues of $2.1 billion. Moreover, its top line grew 14% year-over-year, while its bottom line improved 13% from the year-ago quarter. Growing adoption of the company’s Next-Generation Security platforms, driven by the hybrid work culture and a robust need for stronger security, benefitted PANW. Moreover, noting its strong Q1 performance, the company raised its full-year 2025 revenue guidance to $9.12 billion-$9.17 billion and also raised its non-GAAP EPS forecast in the range of $6.26-$6.39.
However, as a result of being downgraded by three separate investment bank analysts earlier this month, including Guggenheim, Deutsche Bank, and BTIG, shares of PANW ended three of its trading sessions from Jan. 6 to Jan. 8 in red. The stock was downgraded mainly due to declining New annual recurring revenue (ARR), slowing momentum, and concerns over its high valuation.
Wall Street analysts are moderately optimistic about Palo Alto’s stock, with a "Moderate Buy" rating overall. Among 47 analysts covering the stock, 32 recommend "Strong Buy," two suggest “Moderate Buy,” 12 recommend “Hold,” and one indicates a “Strong Sell” rating. This configuration is slightly less bullish than three months ago, with 33 analysts suggesting a “Strong Buy.”
The average price target for PANW is $204.90, which indicates a modest 15.7% potential upside from the current levels.
