Palo Alto Networks (PANW) Stock Spikes on Robust Q1 Data, Jim Cramer: 'Best of Breed'

Palo Alto Networks (PANW) shares are popping on Tuesday after the cybersecurity company reported better-than-expected first quarter 2016 earnings after yesterday's market close.
By U-Jin Lee ,

NEW YORK (TheStreet) -- Palo Alto Networks (PANW) - Get Report  shares are popping 5.22% to $181 in Tuesday's afternoon session on heavy trading volume after the cybersecurity company reported better-than-expected first quarter 2016 earnings on Monday after the markets closed. 

For the latest quarter, the company earned 35 cents a share, topping analysts' forecasts by 3 cents. 

Revenue of $297.2 million beat projections of $284.4 million. 

In the same period the year prior, the company earned 15 cents a share on revenue of $192.3 million.

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio commented on Palo Alto Networks earnings in an article titled 'Cramer: In Cyber Defense, the Fundamentals Are on Fire' published today, saying: "This one has always been the best of breed, and last night it showed us why with astounding growth, 61% year-over-year billings and a 71% growth in deferred revenue, which means that the profits in the future will be there." 

"I know a lot of people have been saying 'yeah, yeah, sure, sure' about this company because it doesn't make money, but I think some very big free cash flow projections will ameliorate that concern," he added.

These results come at a time where the cyber security industry has seen an increase in threats to corporations, consumers and governments. Therefore, this is ramping up demand for cyber security products and services, the Financial Times added.

"We believe that our success is due to our unwavering commitment to solving our customers' most complex security challenges with the industry's most innovative technology," CEO Mark McLaughlin stated. 

The company also gave its second quarter 2016 earnings guidance. It now expects profit to be between the range of 38 cents a share to 39 cents a share and sales to come in between $314 to $318 million. 

Looking ahead, the global cyber security market is predicted to grow to $170.21 billion by 2020 from $106.32 billion in 2015, Reuters added.

Separately, TheStreet Ratings team rates PALO ALTO NETWORKS INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

We rate PALO ALTO NETWORKS INC (PANW) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been unimpressive growth in net income over time.

You can view the full analysis from the report here: PANW

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