This Day On The Street
Continue to site
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

Why Palo Alto Networks Is a Buy Ahead of Earnings

NEW YORK ( TheStreet) -- With Palo Alto Networks (PANW - Get Report) stock trading near its 52-week low, I'm trying to figure out where this company went wrong.

Although the company's initial public offering earlier this year did not come with as much fanfare as others in the social media realm, the company's arrival to the stock market brought with it high expectations. However, unlike other recent IPOs, Palo Alto has produced. But did it do enough?

In the company's first quarterly report as a public company, Palo Alto did what it had to do to affirm to investors that although the company is young, it can deliver the goods. For its fiscal fourth quarter, Palo Alto 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 was $4.6 million on a GAAP basis, or 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 revenue soar almost 90% from the previous year, but it jumped 15% sequentially. 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%. But that was only part of the good news.

Palo Alto is not all about numbers. The company has pioneered what is considered next-generation security along with a platform that is considered one of the most innovative in the industry. Its growth figures suggest that enterprise customers are willing to pay whatever the company is willing to charge.

Palo Alto has a platform that helps corporate clients secure their network while safely enabling them to manage the increasingly complex and rapidly growing number of applications running on their networks. Investors want to know how long this growth spurt will last before the company becomes an acquisition target. I think Cisco (CSCO) will be calling soon.
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
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
PANW $148.38 -2.30%
AAPL $94.00 0.38%
FB $117.63 -0.79%
GOOG $696.13 -0.30%
TSLA $235.51 -2.60%


Chart of I:DJI
DOW 17,721.49 -169.67 -0.95%
S&P 500 2,057.74 -23.69 -1.14%
NASDAQ 4,755.5320 -62.0620 -1.29%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs