Palo Alto Lowers Q3 Profit Forecast Amid Margin Pressure
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy PANW?
Source: stocktwits
- Profit Forecast Downgrade: Palo Alto forecasts Q3 adjusted profit between $0.78 and $0.80 per share, falling short of analysts' average estimate of $0.92, indicating significant margin pressure on the company.
- Rising Cost Impact: The company reported a marginal impact on product COGS due to higher memory and storage prices, with CFO Dipak Golechha asserting that they are well-positioned to manage these dynamics, yet concerns about rising costs persist across electronics manufacturers.
- Market Sentiment Shift: Following the earnings report, retail sentiment for PANW shifted from 'extremely bullish' to 'neutral', as investors debated whether the stock's decline was an overreaction or a justified repricing, highlighting ongoing concerns about AI's impact on cybersecurity demand.
- Ongoing Acquisition Strategy: Before the earnings call, Palo Alto announced its acquisition of Koi, an agent-based endpoint security firm, continuing its aggressive acquisition strategy, which underscores its proactive positioning in the rapidly evolving cybersecurity market.
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Analyst Views on PANW
Wall Street analysts forecast PANW stock price to rise
34 Analyst Rating
28 Buy
5 Hold
1 Sell
Strong Buy
Current: 166.950
Low
157.00
Averages
232.49
High
265.00
Current: 166.950
Low
157.00
Averages
232.49
High
265.00
About PANW
Palo Alto Networks, Inc. provides comprehensive artificial intelligence (AI)-powered security solutions across network, cloud, security operations and AI. The Company focuses on four areas: Network Security, Cloud Security, Security Operations and Threat Intelligence and Advisory Services (Unit 42). Its network security platform comprises ML-powered firewalls, AI Runtime Security, and a Secure Access Service Edge (SASE) framework, which includes Prisma Access, Prisma SD-WAN, and Prisma Access Browser to secure remote workforces and branch offices. Its Cloud security is delivered via Prisma Cloud, a Code to Cloud platform that protects applications, data, GenAI environments, and the cloud-native stack throughout the development lifecycle. Its Unit 42 division provides intelligence-led consulting, incident response, managed detection and response, and threat hunting services. Its Prisma AIRS is an AI security platform which secures applications, agents, models and data.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Palo Alto Releases Earnings Amid Changing Cyber Threat Environment
- Earnings Report: Palo Alto Networks is set to release its second-quarter earnings report on Tuesday afternoon.
- AI Disruption: The company is also focusing on the impact of artificial intelligence on various industries, indicating a strategic shift in their approach.
See More
Palo Alto Networks to Release Q2 Earnings Results
- Earnings Expectations: Palo Alto Networks is set to release its Q2 earnings report after the market close on February 17, with analysts forecasting earnings of $0.94 per share, an increase from $0.81 per share in the same quarter last year, indicating ongoing improvement in profitability.
- Revenue Growth: The company is expected to report quarterly revenue of $2.58 billion, up 14.2% from $2.26 billion a year earlier, reflecting strong demand and an increase in market share within the cybersecurity sector.
- Acquisition Completion: On February 11, Palo Alto Networks announced the completion of its acquisition of CyberArk for $45 per share in cash plus 2.2005 shares of Palo Alto stock, which will enhance its product offerings and competitive positioning in the market.
- Stock Performance: Following the latest news, Palo Alto's stock rose by 2.6% to close at $166.95, indicating positive market sentiment regarding the company's growth potential moving forward.
See More
Palo Alto Networks Q2 2026 Earnings Call Highlights
- Strong Revenue Growth: Palo Alto Networks reported total revenue of $2.59 billion for Q2 2026, reflecting a 15% year-over-year increase, with NGS ARR growing 28% to $6.33 billion, indicating robust demand in cybersecurity and successful execution of its platformization strategy.
- Strategic Acquisitions Completed: The company successfully completed its acquisitions of CyberArk and Chronosphere, with Chronosphere contributing approximately $200 million in ARR, expected to enhance the company's identity security and observability capabilities, driving future growth.
- SASE Business Thriving: SASE ARR surpassed $1.5 billion, growing 40% year-over-year, while software firewall ARR increased by 25%, demonstrating sustained market demand for integrated security solutions and expanding the company's market share.
- Optimistic Future Outlook: The company anticipates NGS ARR for FY 2026 to be between $8.52 billion and $8.62 billion, with revenue projected between $11.28 billion and $11.31 billion, reflecting management's confidence in sustained growth, targeting $20 billion in NGS ARR by 2030.
See More
Palo Alto Lowers Q3 Profit Forecast Amid Margin Pressure
- Profit Forecast Downgrade: Palo Alto forecasts Q3 adjusted profit between $0.78 and $0.80 per share, falling short of analysts' average estimate of $0.92, indicating significant margin pressure on the company.
- Rising Cost Impact: The company reported a marginal impact on product COGS due to higher memory and storage prices, with CFO Dipak Golechha asserting that they are well-positioned to manage these dynamics, yet concerns about rising costs persist across electronics manufacturers.
- Market Sentiment Shift: Following the earnings report, retail sentiment for PANW shifted from 'extremely bullish' to 'neutral', as investors debated whether the stock's decline was an overreaction or a justified repricing, highlighting ongoing concerns about AI's impact on cybersecurity demand.
- Ongoing Acquisition Strategy: Before the earnings call, Palo Alto announced its acquisition of Koi, an agent-based endpoint security firm, continuing its aggressive acquisition strategy, which underscores its proactive positioning in the rapidly evolving cybersecurity market.
See More
Stock Market Rebounds Slightly, Nvidia Gains from Meta AI Deal
- Market Rebound: The stock market experienced a slight rebound on Tuesday, despite remaining divided, indicating cautious optimism among investors that could provide some support for future trading.
- Nvidia Gains: Nvidia's stock rose late in the session due to a deal with Meta in the AI sector, reflecting ongoing market confidence in its capabilities, which may drive future earnings growth.
- AMD and Broadcom Decline: In contrast, AMD and Broadcom saw their stock prices slump, suggesting a cautious outlook from the market regarding these companies, which could affect their short-term investment appeal.
- Increased Industry Divergence: The overall market divergence has intensified, with some tech stocks performing well while others face pressure, potentially leading investors to be more selective in their stock choices, impacting overall market liquidity.
See More
Software Stocks Decline, Financials Support Market Stability
- Software Stock Pressure: Concerns over AI tools potentially disrupting existing business models led to significant declines in software stocks, with Palo Alto Networks dropping over 8% in after-hours trading, reflecting market caution towards tech equities.
- Strong Financial Performance: Despite the pressure on software stocks, financials like Citigroup and JPMorgan Chase rose by 2.7% and 1.5% respectively, helping to limit overall market losses and pushing major indexes into positive territory at the close, demonstrating resilience in the financial sector.
- Cautious Market Sentiment: U.S. stock futures slipped late Tuesday, with Nasdaq 100 futures down 0.2% and S&P 500 futures down 0.1%, indicating investor caution ahead of upcoming Fed minutes and key economic data releases.
- Trade Agreement Progress: The first projects under the U.S.-Japan trade deal have been approved, covering oil and gas, power generation, and critical minerals, marking the initial deployment of Japan's $550 billion investment commitment, which could positively impact related industries.
See More
Palo Alto Releases Earnings Amid Changing Cyber Threat Environment
- Earnings Report: Palo Alto Networks is set to release its second-quarter earnings report on Tuesday afternoon.
- AI Disruption: The company is also focusing on the impact of artificial intelligence on various industries, indicating a strategic shift in their approach.
See More
Palo Alto Networks to Release Q2 Earnings Results
- Earnings Expectations: Palo Alto Networks is set to release its Q2 earnings report after the market close on February 17, with analysts forecasting earnings of $0.94 per share, an increase from $0.81 per share in the same quarter last year, indicating ongoing improvement in profitability.
- Revenue Growth: The company is expected to report quarterly revenue of $2.58 billion, up 14.2% from $2.26 billion a year earlier, reflecting strong demand and an increase in market share within the cybersecurity sector.
- Acquisition Completion: On February 11, Palo Alto Networks announced the completion of its acquisition of CyberArk for $45 per share in cash plus 2.2005 shares of Palo Alto stock, which will enhance its product offerings and competitive positioning in the market.
- Stock Performance: Following the latest news, Palo Alto's stock rose by 2.6% to close at $166.95, indicating positive market sentiment regarding the company's growth potential moving forward.
See More
Palo Alto Networks Q2 2026 Earnings Call Highlights
- Strong Revenue Growth: Palo Alto Networks reported total revenue of $2.59 billion for Q2 2026, reflecting a 15% year-over-year increase, with NGS ARR growing 28% to $6.33 billion, indicating robust demand in cybersecurity and successful execution of its platformization strategy.
- Strategic Acquisitions Completed: The company successfully completed its acquisitions of CyberArk and Chronosphere, with Chronosphere contributing approximately $200 million in ARR, expected to enhance the company's identity security and observability capabilities, driving future growth.
- SASE Business Thriving: SASE ARR surpassed $1.5 billion, growing 40% year-over-year, while software firewall ARR increased by 25%, demonstrating sustained market demand for integrated security solutions and expanding the company's market share.
- Optimistic Future Outlook: The company anticipates NGS ARR for FY 2026 to be between $8.52 billion and $8.62 billion, with revenue projected between $11.28 billion and $11.31 billion, reflecting management's confidence in sustained growth, targeting $20 billion in NGS ARR by 2030.
See More
Palo Alto Lowers Q3 Profit Forecast Amid Margin Pressure
- Profit Forecast Downgrade: Palo Alto forecasts Q3 adjusted profit between $0.78 and $0.80 per share, falling short of analysts' average estimate of $0.92, indicating significant margin pressure on the company.
- Rising Cost Impact: The company reported a marginal impact on product COGS due to higher memory and storage prices, with CFO Dipak Golechha asserting that they are well-positioned to manage these dynamics, yet concerns about rising costs persist across electronics manufacturers.
- Market Sentiment Shift: Following the earnings report, retail sentiment for PANW shifted from 'extremely bullish' to 'neutral', as investors debated whether the stock's decline was an overreaction or a justified repricing, highlighting ongoing concerns about AI's impact on cybersecurity demand.
- Ongoing Acquisition Strategy: Before the earnings call, Palo Alto announced its acquisition of Koi, an agent-based endpoint security firm, continuing its aggressive acquisition strategy, which underscores its proactive positioning in the rapidly evolving cybersecurity market.
See More
Stock Market Rebounds Slightly, Nvidia Gains from Meta AI Deal
- Market Rebound: The stock market experienced a slight rebound on Tuesday, despite remaining divided, indicating cautious optimism among investors that could provide some support for future trading.
- Nvidia Gains: Nvidia's stock rose late in the session due to a deal with Meta in the AI sector, reflecting ongoing market confidence in its capabilities, which may drive future earnings growth.
- AMD and Broadcom Decline: In contrast, AMD and Broadcom saw their stock prices slump, suggesting a cautious outlook from the market regarding these companies, which could affect their short-term investment appeal.
- Increased Industry Divergence: The overall market divergence has intensified, with some tech stocks performing well while others face pressure, potentially leading investors to be more selective in their stock choices, impacting overall market liquidity.
See More
Software Stocks Decline, Financials Support Market Stability
- Software Stock Pressure: Concerns over AI tools potentially disrupting existing business models led to significant declines in software stocks, with Palo Alto Networks dropping over 8% in after-hours trading, reflecting market caution towards tech equities.
- Strong Financial Performance: Despite the pressure on software stocks, financials like Citigroup and JPMorgan Chase rose by 2.7% and 1.5% respectively, helping to limit overall market losses and pushing major indexes into positive territory at the close, demonstrating resilience in the financial sector.
- Cautious Market Sentiment: U.S. stock futures slipped late Tuesday, with Nasdaq 100 futures down 0.2% and S&P 500 futures down 0.1%, indicating investor caution ahead of upcoming Fed minutes and key economic data releases.
- Trade Agreement Progress: The first projects under the U.S.-Japan trade deal have been approved, covering oil and gas, power generation, and critical minerals, marking the initial deployment of Japan's $550 billion investment commitment, which could positively impact related industries.
See More
