Will Palo Alto Networks (PANW) Earnings Continue the Cybersecurity Surge?

Cybersecurity has been in focus during this phase of earnings season with Palo Alto Networks (PANW) reporting after today’s close on the back of recent strong results from its peers CrowdStrike (CRWD), Okta (OKTA), and Fortinet (FTNT).

Analysts are looking for Palo Alto earnings growth of roughly 3% year-over-year, to $0.98 per share from $0.95, and a 32% jump in revenue to $3.35 billion compared to $2.54 billion last year.

While Microsoft (MSFT) is technically a bigger cybersecurity entity, Palo Alto is the biggest pure-play name in the field boasting a $311.4 billion market cap that focuses on protecting computer networks and data from hackers, malware, and digital theft using firewalls and cloud security operations. They have three major product lines: Strata for network security, Prisma for cloud security, and Cortex, which is an AI-driven security operations and automation platform.

Here are three things to think about for PANW’s earnings.

Strong environment for cybersecurity: For as many opportunities as AI offers, it also seems to bring unprecedented new threats in terms of cybersecurity risks. While this is a tricky situation for many businesses, it is a tailwind for cybersecurity software and services, as shown by this earnings season. Fellow digital defense names CrowdStrike, Okta, and Fortinet all beat earnings expectations in their recent reports. CrowdStrike and Okta both reported after the close on Aug. 26, sparking a sympathy rally in PANW shares as well to the tune of about 12.8%. See Shay Boloor on CRWD, OKTA Earnings Surge & 'SaaSapolooza' Security Needs

Analyst Outlook: Recent analyst coverage has been bullish, with at least 16 analyst price target increases. On Monday, Scotiabank raised its price target to $430 from $320 and kept its outperform rating. Last week, Jefferies bumped its target to $450 from $335 while also keeping its buy rating, saying PANW can beat sales estimates and that they expect a strong fiscal 2027 sales outlook. Meanwhile, JPMorgan on Aug. 25 also lifted its target to $384 from $326 while keeping its overweight rating. The JPMorgan report said platform momentum has left PANW positioned for positive fiscal 4Q results, and that they should post strong free cash flow and potential upside to annual recurring revenue outlook. See PANW Platformization: Key Value Proposition, or Margin Pressure Risk?

Technicals and Options Market: Palo Alto shares show a relative low after the previously mentioned gap up near about 356.66 and a post-gap high of 387.33, which is just a stone’s throw from the all-time highs of 398.88 on Aug. 13. Another notable recent low came just before the gap on Aug. 26, which gave a potential support area near 328. The options market shows a potential expected move range of +/-34 (9%) for this Friday’s Sept. 4 expiration. This suggests traders may view new all-time highs as a possibility with the upper range coming in at about 410. See Andersen: Cybersecurity "Like Medieval Castle," What Makes Each Stock Different

For this week's economic and earnings calendars, see: Week Ahead: Big Week for Economic Data and Tech Earnings 

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