Palo Alto Networks Q4 Earnings Preview: Analyst sentiment mostly positive with upward revisions

Palo Alto Networks (NASDAQ:PANW) is scheduled to announce Q4 earnings results on Monday, August 18th, after market close.

Wall Street, on average, expects the cybersecurity company to post a quarterly EPS of $0.89 (-41.1% Y/Y) on revenue of $2.5B (+13.6% Y/Y).

In the third quarter, PANW reported better-than-expected earnings and revenue, but its gross margin was below estimates. For the fourth quarter, the company expects total revenue in the range of $2.49B to $2.51B, representing year-over-year growth of between 14% and 15%.

Most recently, Palo Alto Networks agreed to acquire identity security firm CyberArk (CYBR) at an equity value of approximately $25B for CyberArk.

KeyBanc analysts cited strategy concerns with the acquisition and downgraded the PANW stock as they do not think there are meaningful synergies between identity and a broad platform vendor focused on network and SecOps, among other reasons.

On the contrary, Wedbush noted the deal to be a transformational one that might reshape the cybersecurity market. Evercore ISI and Jefferies also determined the deal enhances Palo Alto's offerings by adding privileged access management capabilities and strengthening its AI security measures.

"PANW's platformization strategy is driving solid ARR growth and customer stickiness, but cloud competition and legacy firewall risks persist," pointed out a recent Seeking Alpha analysis. 

Over the last 2 years, PANW has beaten EPS estimates 100% of the time and has beaten revenue estimates 88% of the time.

Over the last 3 months, EPS estimates have seen 37 upward revisions and 1 downward. Revenue estimates have seen 28 upward revisions and 10 downward.

Since the start of the year, PANW shares have fallen 3.9%, compared to the 10% rise in the broader S&P 500 index (SP500).

Seeking Alpha's Quant recommended the stock as a Hold, while the Wall Street analysts see the company as a Buy.

PANW shares were up nearly 1% on Friday.  

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