Will Palo Alto Networks Keep Suffering Post-IPO Blues?
On Thursday, Palo Alto Networks will release its latest quarterly results. Since going public last summer, the company has given back all of its initial surge following its IPO, with shares giving up a quarter of their value.
The popularity of the big data movement in the technology sector has created major opportunities for companies new and old, and Palo Alto has sought to earn a valued place in the industry with its security products. As more data flows through the Internet, securing it from unwanted predators will only get more important. Let's take an early look at what's been going on at Palo Alto Networks over the past quarter and what we're likely to see in its quarterly report.
Stats on Palo Alto Networks
Analyst EPS Estimate
Change From Year-Ago Revenue
Earnings Beats in Past 4 Quarters
Source: Yahoo! Finance. *Since going public three quarters ago.
Will Palo Alto Networks get out of its stock slump this quarter?
Over the past few months, analysts have been fairly stable in their views on Palo Alto, keeping April-quarter earnings estimates but boosting fiscal 2013 and 2014 prospects by $0.01 per share. The stock, though, has continued its downward move, falling almost 15% since the end of February.
Palo Alto has huge appeal to tech investors despite its recent share-price setback. The rise in cyber-attacks on government and commercial websites and networks has refocused attention on the need for cybersecurity, and Palo Alto aims to provide the most up-to-date protection available by using cloud-based updates and upgrades to its security suite rather than building them directly into hardware solutions.
Palo Alto faces huge competition, both in the form of Cisco and other major networking companies as well as specialists Check Point Software and Fortinet. But Palo Alto hasn't let that stop it from moving forward with interesting new products. For instance, last November, the company released its next-generation virtual-data-center firewall, which works alongside cloud-computing giant VMware's products to secure data on virtual networks. Beyond helping Palo Alto directly, the firewall should also enhance the value of VMware's virtualization products, potentially accelerating the movement toward cloud computing.
Given Palo Alto's huge growth recently, some analysts believe it's a logical takeover candidate in the hot industry. Check Point Software has seen sluggish growth lately, and buying Palo Alto would help it reinvigorate its upward trajectory and keep up with its own competition. Meanwhile, VMware would make a reasonable buyer for the company as well if it decided that it wanted to provide its own vertically integrated proprietary network security into its products.
In Palo Alto's earnings report, watch to see if the company can keep its aggressive growth rate up. With Fortinet having recently guided revenue and earnings downward last month, Palo Alto needs to avoid the same trend if it wants to sustain its premium valuation.
Five enter, one leaves
It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.
Click here to add Palo Alto Networks to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.
The article Will Palo Alto Networks Keep Suffering Post-IPO Blues? originally appeared on Fool.com.Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Check Point Software Technologies, Cisco Systems, and VMware. The Motley Fool owns shares of Check Point Software Technologies and VMware. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.