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Is a Beat in Store for Palo Alto (PANW) in Q3 Earnings?

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Palo Alto Networks, Inc. (PANW - Free Report) is slated to release third-quarter fiscal 2018 results on Jun 4.

Notably, the company surpassed the Zacks Consensus Estimate in each of the trailing four quarters with an average positive surprise of 11.3%. In the previous quarter, the company came up with a positive earnings surprise of 8.9%. Let’s see how things are shaping up prior to this announcement.

Factors to Consider

Driven by its innovative next generation security platforms, Palo Alto is growing rapidly in the cybersecurity space. Palo Alto’s security platforms simplify security infrastructure for organizations by eliminating the need for multiple, standalone security appliances and software products. This reduces the total cost of ownership, in turn, giving a competitive edge to the organization.

Furthermore, its subscription-based products, including the likes of WildFire, AutoFocus, Aperture, Traps and Virtual have been witnessing strong adoption among organizations, which is also a tailwind for the company.

The company’s innovative product portfolio and continued efforts to enhance the same with advanced features help Palo Alto win new deals. Notably, during second-quarter fiscal 2018, the company added nearly 3000 customers. It should be noted that in each of the last 24 quarters, Palo Alto has added at least 1,000 customers. We believe that expansion of customer base will continue to be a top-line booster for the company.

Furthermore, acquisitions have been one of Palo Alto’s key strategies to enhance its product portfolio as well as expand the company’s global reach. During the soon-to-be reported quarter, the company acquired public could security provider, Evident.io and Israel-based automated endpoint security provider, Secdo.

These acquisitions are expected to be accretive to the company’s portfolio, thereby proving to be beneficial for its top line.

Additionally, the company’s existing cloud partnerships with companies like Amazon’s (AMZN - Free Report) Amazon Web Services and Alphabet’s (GOOGL - Free Report) Google Cloud are positives.

What the Zacks Model Unveils?

Our proven model conclusively shows that Palo Alto Networks is likely to beat earnings estimates this quarter. Per our model, a stock with a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold), has higher chance of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Palo Alto Networks carries a Zacks Rank #3 and has an ESP of +0.89%.

The Zacks Consensus Estimate for the quarter under review is pegged at 96 cents, representing year-over-year growth of 57.4%. Additionally, analysts polled by Zacks project revenues of roughly $545.8 million, up 26.4% from the year-ago quarter.

Another Stock With the Favorable Combination

Here is a company you may want to consider as our model shows that this has the right combination of elements to post an earnings beat:

Twitter, Inc. has an Earnings ESP of +1.60% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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