Key takeaways
- Shares of Palo Alto Networks fell nearly 9% in extended trading on Monday after the cybersecurity firm issued a lackluster outlook for the current quarter and full year.
- The company's weak guidance has raised concerns about its recent move to a consolidated cybersecurity platform aimed at driving growth among cautious enterprise customers.
- Palo Alto Networks stock finds a support zone between $281 and $295 at the 50-day moving average and price action over the past five months.
Shares of Palo Alto Networks (PANW) fell nearly 9% late Monday after the cybersecurity company issued a lackluster outlook for the current quarter and full year, but the stock may find buying interest near a key support zone on the charts.
Since retracing to the 200-day moving average (MA) in early April, Palo Alto Networks stock has been trending cautiously bullish, with the price breaking above the 50-day MA at the end of that month. Trading volumes increased over the past week, indicating bullish momentum leading to the company's quarterly results. However, it looks like that positive sentiment will end abruptly on Tuesday following the company's lackluster outlook.
Amid the earnings-related selling, investors should monitor a region on the chart between $281 and $295, an area where the price finds a support zone of the 50-day MA and previous price action over the past five months .
The stock ended up trading after hours at $295.61, a drop of 8.7% from the end of the regular session.
Mediocre outlook does not impress
For the fiscal fourth quarter ending in July, the Silicon Valley-based company guided revenue of $2.15 billion to $2.17 billion, with a midpoint of $2.16 billion that was in line with analysts' forecast. It believes that billings in the period, which represent deferred revenue, will be between $3.43 billion and $3.48 billion, compared to expectations of $3.45 billion.
For the full fiscal year, the company kept its revenue guidance relatively unchanged, expecting it to range between $10.13 billion and $10.18 billion, compared with its previous forecast of $10.10 billion to $10.18 billion. 10.20 billion.
In an effort to seek growth amid cautious enterprise spending on cybersecurity solutions, the company recently pivoted to a consolidated security platform, offering a variety of initiatives, such as free product offerings, to attract corporate subscriptions.
“Minor revisions to full-year FY24 guidance failed to indicate a significant pick-up in momentum, and the downstream benefit of greater platform acceptance by large customers remains to be seen. This was reflected in some lackluster forecasts for the Q4FY24 period,” Third Bridge analyst Jordan Berger said Reuters.
For the three-month period ending April 30, the cybersecurity giant posted adjusted earnings of $1.32 per share on net sales of $1.98 billion. Both metrics beat estimates, which analysts had pegged at $1.25 per share and $1.97 billion, respectively. However, revenue in the period of $2.33 billion was slightly below the consensus of $2.34 billion.
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