Palo Alto Networks (PANW) - Get Report shares traded sharply higher  Wednesday after the cybersecurity group posted a smaller-than-expected second quarter loss and said it would buyback $1 billion worth of stock

Palo Alto Networks, which designs firewall protection services for the cloud computing industry, posted adjusted earnings of $1.51 per share for the three months ending in January, its fiscal second quarter, and a net loss of 3 cents per share. Group revenues rose 30% to $711.2 million, the company said, and forecast a current quarter tally of between $697 million and $707 million. 

"We continue to be laser focused on delivering technology that enables our customers in the cloud journey by delivering the broadest set of security capabilities across all clouds and cloud configurations," CEO Nikesh Arora told investors on a conference call late Tuesday. 

(Palo Alto customer) are very concerned of making sure that their B2B customers have a secure tunnel going from, all the way from their devices or their cars or whatever they choose to implement or health care devices are rigged, back to the cloud," he explained. "And we believe our firewall is uniquely positioned to solve that problem for them in the K2 firewall space. So we're very happy with a lot of conversations we're having."

Palot Alto shares were marked 8.14% higher in early Wednesday trading to change hands at $254.66 each, a move that would extend the stock's three-month gain to around 54% and value the group at around $24 billion. 

Product revenues, which includes its Panorama offering, grew 33% to $271.6 million, the company said, while services sales rose 29% to $439.6 million.

"We told members that in order to push higher given the massive run we saw into earnings, we would need a monster beat. Bottom line, our conviction was rewarded and Palo Alto is showing why it's the industry leader," said Zev Fima, an analyst with Jim Cramer's Action Alerts Plus portfolio.

Palo Alto Networks continues its work in acquiring new customers and adding new security products to its portfolio. Last week, it announced a $560 acquisition of Demisto, a startup focusing on security orchestration, automation, and response. On a post-earnings call, CEO Nikesh Arora told investors that the Demisto will continue operating as a "separate speedboat" under its CEO, Slavik Markovich.

"We believe that management will focus on M&A to improve cloud security and data, including leveraging data from its products and partners," said BMO Capital Markets analyst Keith Bachman, who raised his price target to $285 per share. "We think the proposed Demisto acquisition highlights the focus on innovating on large data sets and analytics, which we think will improve Palo Alto's capabilities in the Application Framework."

"We think firewall market share gains in the enterprise accounts will increasingly be driven by analytics, and we have greater confidence in Palo Alto's longer-term capabilities in driving value through analytics than competing vendors," he added.