Palo Alto Networks Inc (NYSE:PANW)’s fiscal first quarter 2024 billings growth miss was not surprising to Jefferies analysts given the full year hardware headwinds faced by the cybersecurity company.
In an update to clients, the analysts maintained their ‘Buy’ rating on the stock while raising their price target 11% to $285 per share, noting its long-term growth story remains on track.
Analysts at Jefferies specifically cited Palo Alto’s annual recurring revenue (ARR) and free cash flow (FCF) growth as reasons for optimism.
"Guidance for full year 2024 ARR appears more conservative than it was 90 days ago and that doesn't account for any boost from Talon/Dig (acquisitions), which will close in 2Q," the analysts wrote.
Also, the fact the company was able to maintain its FCF guidance for 37%-38% in fiscal 2024 was "impressive" given its reduced billing growth for the year and underpins confidence in Palo Alto’s recurring revenue model over the long term, they added.
Shares of Palo Alto Networks fell 6% to $241.94 in midday trading on Thursday but have gained 75% year to date.
Contact Sean at sean@proactiveinvestors.com