This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Can Palo Alto Networks Grow Into its Valuation?

NEW YORK ( TheStreet) -- "Hit or miss" is probably the most accurate way to describe the initial public offering market this year.

However, enterprise security darling Palo Alto Networks (PANW - Get Report) is one company of only a handful whose IPO might have been considered a success. After filing an expected trading range of $34 to $37, the company's shares soared to over $55 last July on its first day of trading.

Today the stock sits comfortably at $61 after hitting a 52-week high of $72.61 in early September.

Palo Alto has indeed pioneered what is considered next-generation security along with a platform that is considered one of the most innovative in the industry. Early-on investors have placed a lot of faith in its story.

But since the company is not yet fully established publicly, I wonder if all of this excitement is not premature, and if its valuation is deserved.

In its first quarter as a public company, Palo Alto did what it had to do to affirm investor confidence in its business. For its fiscal fourth quarter, the company saw its revenue jump to $75.6 million -- representing an increase of 88% and topping the $40.2 million it reported in the same quarter of a year ago.

Its net loss for the quarter arrived at $4.6 million on a GAAP basis, 18 cents per share. This compares favorably to its net loss of $6 million in the same period of a year ago.

Overall revenue for fiscal 2012 grew 115% to $255.1 million -- exceeding its 2011 mark of $118.6 million. Calling these numbers impressive would be an understatement.

Not only did the company's revenue soar almost 90% from the previous year, it jumped 15% from its third quarter. In addition to billings, which rose by 57%, the company's product revenue grew by 70% while revenue from services shot up a robust 135%.

For its exceptional performance, the company's president and CEO, Mark McLaughlin offered this:

"The fourth quarter was a strong finish to a great year for Palo Alto Networks. In our first quarter as a public company, we achieved record revenue and grew our customer base to over 9,000 customers. For the year, we grew revenue 115%, clearly outpacing the market and demonstrating the power of our technology."

On the heels of such a performance, it's hard to disagree with that statement. The company was on fire. I only wonder now about its second act as Palo Alto must answer to where it goes from here. Based on revenue and growing demand, the company has products and services for which enterprise customers are willing to pay handsomely.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
PANW $150.82 0.00%
AAPL $128.95 0.00%
FB $78.99 0.00%
GOOG $537.90 0.00%
TSLA $226.03 0.00%

Markets

DOW 18,024.06 +183.54 1.03%
S&P 500 2,108.29 +22.78 1.09%
NASDAQ 5,005.3910 +63.9670 1.29%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs