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Palo Alto Networks Is Too Good to Be Left Alone

During the quarter, the company posted a wider-than-expected loss $139.1 million, or $1.86 per share. But this was mostly due to the $175 million settlement it paid to Juniper to put their patent infringement dispute to rest. But it gets better. Aside from the settlement amount being much lower than analysts expected, both companies agreed not to sue each other for eight years.

There's nothing the Street hates more than uncertainty. No one saw this settlement coming. But the good news didn't end there. Management projected fourth-quarter earnings to be 10 cents to 11 cents per share on revenue of $158 million to $162 million. The high end of both ranges were better than Street expectations of 10 cents per share on revenue of $158.4 million.

So what about the company's future now that it is performing so well? With cyber attacks constantly on the minds of corporations, Palo Alto's next-generation security technology makes it a nice acquisition target. How long is it going to take IBM (IBM) or Oracle (ORCL) to realize this?

Until then, investors should enjoy this win. I recently applied a $90 target on the stock in 12 months. Not only am I going to raise that target by $5, I now expect these shares to reach the $95 threshold in half the time.

At the time of publication, the author held no position in any of the stocks mentioned.


This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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