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Palo Alto Networks Stock Gains as Earnings and Outlook Impress

Palo Alto Networks shares trade higher after reporting adjusted earnings and sales that beat analysts' forecasts and lifts its billings and revenue outlook.

Palo Alto Networks  (PANW) - Get Palo Alto Networks, Inc. Report shares traded higher on Friday after the cybersecurity company reported earnings and sales that beat Wall Street forecasts and also lifted its billings and revenue forecasts for the year.

Palo Alto Networks shares were up 1.68% at $528.70 at l on Friday after the company reported a fiscal first-quarter loss of $103.6 million, or $1.06 a share, compared with a loss of $92.2 million, or 97 cents a share, a year ago.

On an adjusted basis, Palo Alto Networks earned $1.64 a share, beating the $1.57 a share expected by analysts polled by FactSet. Revenue rose to $1.25 billion, up from $946 million in the year-ago quarter and also ahead of analysts’ forecasts of $1.2 billion.

Billings, which reflect future business under contract, rose to $1.38 billion, compared with $1.08 billion a year ago, Palo Alto Networks said.

Palo Alto Networks shares initially fell after the company’s earnings announcement after the closing bell Thursday, though recovered as analysts and investors digested its future outlook.

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"We believe this is a cloud cybersecurity re-rating story in motion, and view Palo Alto's stock as having a strong upward trajectory over the next year as the Street starts to fully appreciate the cloud transformation playing out," Wedbush Securities analyst Dan Ives wrote in a research note.

Ives and his team opted to raise their one-year price target on the stock to $630 from $600 and maintain their outperform rating, "...reflecting incremental deal-flow strength," the analyst wrote.

Palo Alto Networks said it expects adjusted fiscal-second quarter earnings of between $1.63 and $1.66 a share on revenue of between $1.27 billion and $1.29 billion. Billings are expected to ring in between $1.51 billion and $1.53 billion, the company said.

For the full fiscal year, Palo Alto Networks held its adjusted earnings forecast of between $7.15 and $7.25 a share, but raised its sales forecast to between $5.35 billion and $5.4 billion, up from $5.28 billion to $5.33 billion. Full-year billings are now seen at between $6.68 billion and $6.73 billion.

Analysts were expecting sales of $5.31 billion, per-share earnings of $7.24 a share and billings of $6.65 billion.

Palo Alto Networks shares are up 48% year to date and 85% over the past 12 months.