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Don't give up on Palo Alto Networks (PANW) - Get Palo Alto Networks Inc. Report .

Palo Alto Networks, which reports on Wednesday after the close, hasn't recovered from the bludgeoning it took three months ago after missing January quarter sales/billings estimates and issuing below-consensus April quarter and fiscal 2017 (ends in July) guidance. Shares are down about 40% from their 2015 highs, and sport an enterprise value that's equal to only 13 times a fiscal 2018 free cash flow consensus of $782 million.

Intensifying competition from Cisco Systems (CSCO) - Get Cisco Systems Inc. Report, which has gotten more serious about growing sales of next-gen firewalls (NGFWs) and subscription security offerings that compete directly with Palo Alto, seems to be a headwind. But Palo Alto insists a lot of its recent problems are due to sales execution after dramatically growing its salesforce in recent quarters, and notes it still added 2,000 customers last quarter (raising the total base above 37,000).

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And Palo Alto's NGFWs still get very high marks for their ease-of-use, integration and software features. In addition, subscription-based add-on products such as WildFire (malware detection) and Traps (endpoint protection) have been well-received. Sales could still be bumpy over the near-term, but between how much shares have fallen and the solid numbers posted by many security tech peers in April and May, the worst might now be over.

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