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Why Is Palo Alto Networks (PANW) Stock Soaring Today

StockStory - Mon Jun 5, 2023

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What Happened:

Shares of cybersecurity provider Palo Alto Networks (NASDAQ:PANW) jumped 5.33% in the pre-market session after reports that the company would be added to the S&P 500 index. Specifically, Dish Network, a satellite TV provider, would be replaced by Palo Alto Networks. The inclusion of Palo Alto Networks in the S&P 500 is part of the regular quarterly adjustments by S&P Dow Jones Indices to ensure that the indexes accurately reflect the market landscape. After the initial pop the shares cooled down to $224.14, up 3.17% from previous close.

What is the market telling us:

Palo Alto Networks's shares are not very volatile than the market average and over the last year have had only 14 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business. The previous big move was 13 days ago, when the company gained 5.27% on the news that the company delivered a strong "beat and raise" quarter, with third-quarter sales meeting analysts' estimates and billings surpassing Consensus projections. The subscription and support segment continued to show strength. Annual recurring revenue (ARR) from next-generation security solutions grew by an impressive 60%, highlighting the strong adoption of the company's cloud and subscription-based offerings. Earnings per share (EPS) also beat by 19%. Additionally, the company raised its full year guidance for billings, revenue, and non-GAAP EPS, which were at or above current expectations. The results were solid despite management highlighting similar macro concerns observed by peers in the quarter, including cautious spending and deal scrutiny as customers expressed concerns about the deceleration of global economic growth.

Palo Alto Networks is up 61.8% since the beginning of the year. Investors who bought $1,000 worth of Palo Alto Networks's shares 5 years ago would now be looking at an investment worth $3,300.

Is now the time to buy Palo Alto Networks? Access our full analysis of the earnings results here, it's free.