I wrote a preview piece for three tech earnings reports which saw a surprising amount of traffic. I hope investors followed the general advice I gave, namely to avoid AMBA and buy PANW. Now that we have the numbers, let's take a look at what it means for these stocks going forward.
Ambarella (AMBA - Free Report) beat the Wall Street estimate by $0.04 but guided revenue for next fiscal year below previous levels. That is really all you need to know about this one. WIthout revenue growth, the valuation gets really heavy and at least one brokerage agrees with that idea this morning. Craig Hallum downgraded the stock to Hold from Buy before the open this morning.
My Take: I warned investors that this stock has traded lower following earning in each of the previous four quarters. The outlook here tells me that out side of potential M&A rumors, I don't want to be a holder of this stock.
Nutanix (NTNX - Free Report) beat the Wall Street estimate by five cents and then guided revenues higher for next quarter. EPS guidance was inline so there is some implied weakness in margins, but this company has a history of beating the number to the likelihood of another beat and margins being intact is pretty high. I see one brokerage raised their target price to $30 on the stock.
My Take: The stock traded over $24 this morning in the premarket, but then swung back down to $23 in short order. This could be a volatile trading session, but I think we could see this quarter as the one that turned things around for this stock. I like the name long term.
Palo Alto Networks (PANW - Free Report) crushed Wall Street estimates in posting earnings that were $0.13 ahead of the expectations. That beat also came with revenue guidance that was higher than expected. I see several brokerages increasing price targets on this stock and a few upgrades as well.
My Take: A trader asked me if this stock is now back among the ordained few, and the answer is yes. Security software stocks have been seen as somewhat risky lately, but this solid report and good outlook tells me that this stock is headed over $150 in the very near future. I see the stock trading over $144 in the premarket so it could even test that level today.
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