NEW YORK ( TheStreet) -- If there were any questions as to whether or not Wall Street's honeymoon phase with enterprise security darling Palo Alto Networks (PANW - Get Report) was over, the stock's 15% decline following what was on balance a decent third-quarter earnings report should have erased these doubts.While Palo Alto has indeed pioneered what I believe is next-generation security, there was always concern about the company's long-term profitability. Management's downbeat guidance didn't help matters.
We have to keep things in perspective here. It's not as if the entire sector has been knocking the cover off the ball. Palo Alto is still outperforming more dominant players like Fortinet (FTNT) and Check Point (CHKP). Even Cisco, which is regarded as the leader in the sector, posted 5% revenue growth, while also issuing downbeat guidance. In that regard, it would be foolish for Palo Alto to guide against the grain in a market that has yet to show meaningful signs of a rebound in tech spending. To that end, although both the top- and bottom-line outlook fell short of Street estimates, I think management's guidance was in line with overall sector.