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Palo Alto Networks (PANW - Free Report) offers a network security platform that allows enterprises, service providers, and government entities to secure their networks. The stock is a Zacks Rank #5 (Strong Sell) and the Bear of the Day after peers reported poor earnings over the last week.
Palo Alto has a market cap of $11 Billion and has yet to turn a profit. The stock sports a Zacks Style Score of “F” in Value and “B” in Growth. The valuation is concerning as recent earnings from peers FireEye and CyberArk disappointed investors.
FireEye results
Palo Alto is the best in breed of the network security space, but that can’t bring a stock higher when the rest of the space is headed lower. FireEye reported earnings on august 4th and cut Q3 guidance to -$0.32 to -$0.30 verse the -$0.24 expected. The company’s lower outlook was a result of weaker than expected Q2 billings.
CyberArk actually bet by 9 cents, beat in revenue, and raised fiscal year guidance. CEO Ehud Mokady had some comments on the quarter: "As we move into the second half of the year, we plan to continue making thoughtful investments including enhancing our technology platform and expanding market presence.”
Investors sold the news and the stock 7% lower.
PANW reaction
Before FireEye and CyberArk reported, Palo Alto was trading over $132. Now after the earnings news has settled in, the stock is at $125, 5% lower. We won’t see the company report until August 30th and estimate revisions are not looking good.
Estimate Revisions
For fiscal year 2016 estimates have come down 4% over the last 90 days. However, the real concern is fiscal year 2017, as estimate revisions have come down almost 20%, from -$0.94 to -$1.17. be on the lookout for a cut to guidance and more pressure on the stock.
A Better Option
Arris International is a Zacks Rank #1 (Strong Buy) that is an IP, video and broadband technology company. The Company offers video infrastructure, delivery networks, home and business connectivity and devices as well as related products.
The company has a market cap of $5.2 Billion and a Forward PE of 11. The stock sports Zacks Style Scores of “B” in Value. Over the last 90 days, estimates for fiscal year 2016 and 2017 have been revised higher. For 2016, estimates have been raised from $2.40 to $2.57 and for 2017 they have also gone higher, from $2.78 to $2.91. The company next reports on October 26th.
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So Where Are the Profitable Trades?
Be sure to short or avoid this Bear Stock of the Day. Now would you like to see Zacks' recommendations that have the best profit potential? Starting today, for the next month, you can follow all our private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for all Zacks trades >>
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Bear of the Day: Palo Alto Networks (PANW)
Palo Alto Networks (PANW - Free Report) offers a network security platform that allows enterprises, service providers, and government entities to secure their networks. The stock is a Zacks Rank #5 (Strong Sell) and the Bear of the Day after peers reported poor earnings over the last week.
Palo Alto has a market cap of $11 Billion and has yet to turn a profit. The stock sports a Zacks Style Score of “F” in Value and “B” in Growth. The valuation is concerning as recent earnings from peers FireEye and CyberArk disappointed investors.
FireEye results
Palo Alto is the best in breed of the network security space, but that can’t bring a stock higher when the rest of the space is headed lower. FireEye reported earnings on august 4th and cut Q3 guidance to -$0.32 to -$0.30 verse the -$0.24 expected. The company’s lower outlook was a result of weaker than expected Q2 billings.
CyberArk (CYBR - Free Report) results
CyberArk actually bet by 9 cents, beat in revenue, and raised fiscal year guidance. CEO Ehud Mokady had some comments on the quarter: "As we move into the second half of the year, we plan to continue making thoughtful investments including enhancing our technology platform and expanding market presence.”
Investors sold the news and the stock 7% lower.
PANW reaction
Before FireEye and CyberArk reported, Palo Alto was trading over $132. Now after the earnings news has settled in, the stock is at $125, 5% lower. We won’t see the company report until August 30th and estimate revisions are not looking good.
Estimate Revisions
For fiscal year 2016 estimates have come down 4% over the last 90 days. However, the real concern is fiscal year 2017, as estimate revisions have come down almost 20%, from -$0.94 to -$1.17. be on the lookout for a cut to guidance and more pressure on the stock.
A Better Option
Arris International is a Zacks Rank #1 (Strong Buy) that is an IP, video and broadband technology company. The Company offers video infrastructure, delivery networks, home and business connectivity and devices as well as related products.
The company has a market cap of $5.2 Billion and a Forward PE of 11. The stock sports Zacks Style Scores of “B” in Value. Over the last 90 days, estimates for fiscal year 2016 and 2017 have been revised higher. For 2016, estimates have been raised from $2.40 to $2.57 and for 2017 they have also gone higher, from $2.78 to $2.91. The company next reports on October 26th.
Note: Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
So Where Are the Profitable Trades?
Be sure to short or avoid this Bear Stock of the Day. Now would you like to see Zacks' recommendations that have the best profit potential? Starting today, for the next month, you can follow all our private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for all Zacks trades >>