From CNBC: 2024-05-15 06:00:01

Palo Alto Networks is recovering from a steep drop in February, with earnings next week expected to validate its comeback. Shares dipped 28% in February due to a cautious 2024 outlook before bouncing back 13.2%. Analysts anticipate a positive trajectory, backed by three key factors, including history not repeating itself, growing market share, and the strong cybersecurity sector demand.

Despite concerns over a sales strategy shift impacting billings, Palo Alto Networks has reported a decline in fiscal 2024 total billings and revenue guidance. However, analysts believe that the impact of free trials will be smaller than expected, and the company’s new guidance for 2024 has de-risked billing estimates. Investors are hopeful for a positive performance in the upcoming earnings release.

Palo Alto is gaining market share, securing large deals like assisting in cybersecurity for Change Healthcare. CEO Nikesh Arora explains that the move towards platformization will position the company ahead of competitors as the industry consolidates spending. Analysts also point to a favorable backdrop for the cybersecurity sector, with demand remaining high amidst rising cyber threats and regulatory requirements.

Amidst high-profile security incidents in 2024, Palo Alto remains optimistic about the cybersecurity sector. Demand for security offerings continues to rise, especially in light of recent attacks targeting various companies. Analysts have noted the industry’s resilience despite concerns about spending fatigue, with federal spending showing improvement. Analysts are hopeful for Palo Alto’s consistent performance to rebuild investor confidence.



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