Palo Alto Networks stock plummets after guidance cut—key price levels to watch

Palo Alto Networks, Inc.

Palo Alto Networks (PANW) stock prices fall after the cybersecurity company lowers its revenue forecast, noting that customers are cutting back on IT security spending and becoming more demanding as the company shifts strategy. , which plunged more than 20% in after-hours trading Tuesday.

The maker of enterprise cybersecurity solutions has lowered its full-year 2024 sales forecast to $7.95 billion to $8 billion, down from its previous forecast of $8.15 billion to $8.2 billion. The company also lowered its full-year total billings guidance, expecting the closely watched metrics, including deferred revenue, to be between $10.1 billion and $10.2 billion, lower than previously expected estimates of $10.7 billion to $10.8 billion.

Looking to the current quarter, the Santa Clara, California-based cybersecurity giant now expects revenue to be between $1.95 billion and $1.98 billion, with analysts at the high end of that guidance. It fell short of the $2.04 billion expected. The company’s final earnings estimate of $1.24 to $1.26 per share also fell short of Wall Street’s consensus estimate of $1.29.

Despite a rise in online security breaches, the company warned that customers are showing “spend fatigue” and becoming more demanding on cybersecurity as it pivots its strategy to accelerate growth.

“This is new,” Palo Alto CEO Nikesh Arora said on an earnings call. “Customers are realizing that adding incremental products does not necessarily improve security outcomes,” he added. Arora said he sees future growth opportunities in artificial intelligence (AI) as customers seek responsible integration of technology into their IT infrastructure.

PANW stock has been on a consistent upward trend throughout 2023, with gains accelerating in the first six weeks of the year leading up to the company’s quarterly results. Amid the earnings-driven sell-off, investors should keep an eye on the $285 level. This level is an area on the chart that is likely supported by a multi-month uptrend line stretching back to January 2023. This area is also located approximately in the middle. This could also be a confluence of support between the rising 200-day and 50-day moving averages.

Palo Alto shares fell 21.1% to $288.95 in after-hours trading Tuesday.

Fix: This article has been updated to correct the spelling of Palo Alto Networks in the heading.

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As of the date this article was written, the author did not own any of the securities mentioned above.