Update (9:38 a.m.): Updated with Tuesday market open information.
NEW YORK (TheStreet) -- FBR Capital Markets upgraded Palo Alto Networks (PANW) - Get Report to "outperform" from "market perform" and set a $90 target price. The firm noted checks indicate faster adoption of the company's products.
The stock was up 2.86% to $75.22 at 9:37 a.m. on Tuesday.
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Separately, TheStreet Ratings team rates PALO ALTO NETWORKS INC as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate PALO ALTO NETWORKS INC (PANW) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 1.1%. Since the same quarter one year prior, revenues rose by 46.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- PANW has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, PANW has a quick ratio of 2.00, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has increased to $41.40 million or 19.96% when compared to the same quarter last year. Despite an increase in cash flow, PALO ALTO NETWORKS INC's average is still marginally south of the industry average growth rate of 20.08%.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Communications Equipment industry. The net income has significantly decreased by 1428.7% when compared to the same quarter one year ago, falling from -$2.61 million to -$39.95 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Communications Equipment industry and the overall market, PALO ALTO NETWORKS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: PANW Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.