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Susquehanna remains Positive on Palo Alto Networks (NASDAQ:PANW) but noted that the company’s strategy shift creates choppiness.
The firm also cut its price target on the stock to $325 from $400.
The Santa Clara, Calif.-based company saw its stock slump -28.44% on Feb. 21 after it lowered its full-year revenue and billings guidance amid an abrupt change in strategy.
Second quarter billings came in soft, and management reduced the billings outlook again, largely citing customer spending fatigue and Fed weakness, said Shyam Patil, analyst at Susquehanna, in a research note.
Patil added that in response, Palo Alto is accelerating its platformization strategy, which will add more pressure to the top-line metrics over the next 12 to 18 months with the hope of driving faster growth in the long-term.
However, the company’s management expects profitability to generally hold up. Patil noted that, while they expect to see more noise and volatility in the near-term, they remain Positive as they continue to believe Palo Alto (PANW) is well-positioned as one of the key beneficiaries of cyber budget growth, consolidation, and platformization in the space.
Palo Alto Networks (PANW) has a Hold rating at Seeking Alpha’s Quant Rating system, which consistently beats the market. The Seeking Alpha authors’ average rating is also Hold, however, the average Wall Street analysts’ rating is more positive with a Buy.
PANW +2.10% to $288 premarket Feb. 26
