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Palo Alto Shares Up on Court Ruling

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Shares of Palo Alto Networks (PANW - Free Report) jumped 11.67% on Thursday’s trade after the U.S. District Court of Delaware rejected in part a summary judgment motion by Juniper (JNPR - Free Report) for alleged patent infringement by the company. The court also upheld Palo Alto’s summary judgment motion for non-infringement. Shares of Juniper were up modestly for the day at 0.86%.

Juniper sued Palo Alto in Dec 2011 for infringing upon seven patents related to firewall and network security, for which the trial is scheduled for Feb 24, 2014. Subsequently, Palo Alto also accused Juniper of infringing three of its patents.

With the court rejecting Juniper's motion while allowing Palo Alto's, the upcoming Feb 24 trial becomes increasingly important for both the companies. Nonetheless, the balance has somewhat tilted in favor of Palo Alto in the current scenario.

Palo Alto, formed by ex-employees of Juniper, competes with the network solutions provider in the cyber and network security segment. The company is set to report its quarterly results on Feb 24 the same day as the trial.

Juniper’s fourth-quarter 2013 results (released Jan 23, 2014) reflected its strong position among service providers and enterprises. The company’s new products, cost reduction initiatives and improving execution are the other positives.

We believe that the increased spending by service providers remains the growth catalyst for both companies. Juniper’s expansion into the software defined network segment is expected to consolidate its position in the networking space, while Palo Alto’s traction in the cyber security segment continues to be its strength.

Currently, Palo Alto has a Zacks Rank #3 (Hold) and Juniper sports a Zacks Rank #2 (Buy). Stocks such as Accenture (ACN - Free Report) and Micron (MU - Free Report) are also worth a look and carry the same Zacks Rank as Juniper.

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