Palo Alto Networks Q3: Sell With The Insiders

seekingalpha05-23

Palo Alto Networks, Inc. just released its fiscal Q3 earnings report. The seemingly good results were met by selling pressure from investors.The selling pressure is not only limited to the open market...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2437324459?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1342399503/image_1342399503.jpg","is_english":true,"pubTime":"2024-05-23 05:26","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2437324459","market":"hk","top_or_hot":-1,"title":"Palo Alto Networks Q3: Sell With The Insiders","media":"seekingalpha","content":"<div>\n<p>Palo Alto Networks, Inc. just released its fiscal Q3 earnings report. The seemingly good results were met by selling pressure from investors.The selling pressure is not only limited to the open market...</p>\n\n<a href=\"https://seekingalpha.com/article/4695106-palo-alto-networks-q3-sell-with-the-insiders\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palo Alto Networks Q3: Sell With The Insiders</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalo Alto Networks Q3: Sell With The Insiders\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-05-23 05:26 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4695106-palo-alto-networks-q3-sell-with-the-insiders><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Palo Alto Networks, Inc. just released its fiscal Q3 earnings report. The seemingly good results were met by selling pressure from investors.The selling pressure is not only limited to the open market...</p>\n\n<a href=\"https://seekingalpha.com/article/4695106-palo-alto-networks-q3-sell-with-the-insiders\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU1861220033.SGD","symbol_name":"Blackrock Next Generation Technology A2 SGD-H","start_time":0,"source_url":"https://seekingalpha.com/article/4695106-palo-alto-networks-q3-sell-with-the-insiders","article_id":"2437324459","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1342399503/image_1342399503.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2437324459","pubTimestamp":1716413205,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Palo Alto Networks, Inc. just released its fiscal Q3 earnings report. The seemingly good results were met by selling pressure from investors.The selling pressure is not only limited to the open market","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU1861220033.SGD":"Blackrock Next Generation Technology A2 SGD-H","IE00BKVL7J92.USD":"Legg Mason ClearBridge - US Equity Sustainability Leaders A Acc USD","LU2286300806.USD":"Allianz Cyber Security AT Acc USD","LU0731783394.SGD":"Fidelity Global Dividend A-MINCOME(G)-SGD","SG9999001440.SGD":"United Global Dividend Equity Fund A SGD Dist","LU1585245621.USD":"EASTSPRING INV GLOBAL LOW VOLATILITY EQUITY FUND \"A\" (USD) ACC B","CSCO":"思科","LU1571399168.USD":"ALLSPRING GLOBAL LONG/SHORT EQUITY \"IP\" (USD) ACC","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","LU1599440770.SGD":"FIDELITY GLOBAL DIVIDEND \"A\" (SGDHDG) INC","BK4515":"5G概念","BK4532":"文艺复兴科技持仓","LU1917777945.USD":"安联专题基金Cl AT Acc","LU0234570918.USD":"高盛全球核心股票组合Acc Close","IE00B19Z9505.USD":"美盛-美国大盘成长股A Acc","LU1506573853.SGD":"MANULIFE GF GLOBAL EQUITY \"AA\" (SGD) INC","BK4585":"ETF&股票定投概念","BK4534":"瑞士信贷持仓","LU2106854487.HKD":"ALLIANZ THEMATICA \"AMG\" (HKD) INC","LU0079474960.USD":"联博美国增长基金A","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4525":"远程办公概念","LU2023250504.SGD":"Allianz Thematica Cl AMg DIS H2-SGD","LU2265009873.SGD":"Eastspring Investments - Global Growth Equity AS SGD-H","LU1989764664.SGD":"CPR Invest - Global Disruptive Opportunities A2 Acc SGD-H","LU2023250843.SGD":"Allianz Thematica Cl AT Acc H2-SGD","IE00BMPRXR70.SGD":"Neuberger Berman 5G Connectivity A Acc SGD-H","LU0234572021.USD":"高盛美国核心股票组合Acc","LU1169590202.USD":"ALLSPRING (LUX)  U.S. SELECT EQUITY \"I\" (USD) ACC","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","SG9999002232.USD":"Allianz Global High Payout USD","BK4527":"明星科技股","LU1804176565.USD":"EASTSPRING INV GLOBAL GROWTH EQUITY \"A\" (USD) ACC","BK4020":"通信设备","PANW":"Palo Alto Networks","LU1169589451.USD":"ALLSPRING (LUX)  U.S. SELECT EQUITY \"A\" (USD) ACC","SG9999002224.SGD":"Allianz Global High Payout SGD","BK4550":"红杉资本持仓","BK4588":"碎股","IE00BZ1G4Q59.USD":"LEGG MASON CLEARBRIDGE US EQUITY SUSTAINABILITY LEADER \"A\"(USD) INC (A)","SG9999001424.SGD":"United E-Commerce Fund SGD","LU1066053197.SGD":"HSBC GIF GLOBAL EQUITY VOLATILITY FOCUSED \"AM3\" (SGDHDG) INC","BK4097":"系统软件","BK4581":"高盛持仓","LU0868494617.USD":"UBS (LUX) EQUITY SICAV - US TOTAL YIELD SUSTAINABLE \"P\" (USD) ACC","LU1861215975.USD":"贝莱德新一代科技基金 A2","FTNT":"飞塔信息","BK4560":"网络安全概念","LU1244550221.USD":"FRANKLIN GLOBAL MULTI-ASSET  INCOME \"A\" (USDHEDGED) INC (M)","LU1244550577.SGD":"FTIF - Franklin Global Multi-Asset Income A (Mdis) SGD-H1"},"translate_title":"帕洛阿尔托网络第三季度：与内部人士一起销售","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"PANW":1,"CSCO":1,"FTNT":1},"content_text":"Palo Alto Networks, Inc. just released its fiscal Q3 earnings report. The seemingly good results were met by selling pressure from investors.The selling pressure is not only limited to the open market. The insider transactions were also dominated by selling recently.I don't normally consider selling as a bearish sign of business fundamentals.However, in this particular case, I think it is given the concerning signs I read from its recent earnings reports.   Vladimir Zakharov PANW stock: the insiders are selling Palo Alto Networks, Inc. (NASDAQ:PANW) recently released its fiscal 2024 Q3 earnings report. The earnings beat market expectations on both lines. It reported non-GAAP EPS of $1.32, beating the market expectation of $1.25 by 7 cents per share. Total revenue dialed in at $2B, again slightly beating the consensus of $1.97B. Despite the results, investors did not seem to be enthusiastic and responded with a wave of selling, causing a large price correction (of almost 8%) shortly after the numbers came out. The selling pressure is not only limited to the open market, the insider transactions on PANW were also dominated by selling recently. The following chart shows PANW’s insider transactions in the past 6 months. As seen, insiders at PANW have sold a significant amount of company stock in this period, totaling almost $410M, while there was no single buying activity. In early May 2024 alone, one of its EVPs (Chief Product Officer, Lee Klarich) sold multiple batches of shares in a price range of around $300. Usually, I don’t interpret insider selling as a negative sign. The reasoning is detailed in my earlier article, and the gist is quoted here so I can move on to analyses more specific to PANW. When it comes to insider activities, usually I pay more attention to buying activities than selling activities. Insider buying activities usually have only one explanation – the insiders think the stock is undervalued. In contrast, selling activities can be triggered by a range of factors irrelevant to business fundamentals. Insiders may sell a stock for a variety of reasons unrelated to the business, such as to diversify their portfolios, pay for a major expense, exercise stock options, or purely personal reasons (such as divorce or buying a new house).  However, in the case of PANW, I strongly suggest potential investors pay attention considering that A) the insider activities are so one-sided, and B) some of the concerning signs indicated in its recent earnings reports, as detailed next.   DataRoma PANW stock: the concerning signs My view is that the stock had already started showing signs of slowing growth before the Q3 earnings report. As seen in the chart below, its topline growth has dramatically tapered recently, dropping from an annual rate of over 30% in 2022 to the current level of around 15%, which makes it difficult to justify its lofty P/E of 56x (more on this later).   Seeking Alpha Looking ahead, as released in the report, its fiscal year 2024 guidance now points to total billings in the range of $10.13B to $10.18B, translating into an annual growth rate of 10% to 11% only. With a P/E of 56x, this represents a PEG (P/E growth ratio) of more than 5x. To provide a broader perspective, in its previous earnings report released in February 2024, the company already lowered full-year billing guidance by about $600M. In the February release, the company uncharacteristically cautioned investors about its earnings outlook (which also caused a large plunge in its stock prices, as seen in the next chart below. The reduced billings guidance implied a YOY growth rate of only 10%-11%, a big cut from the 16%-17% growth previously expected. Looking ahead, I think the demand slowdown may last longer than anticipated. On that conference call, CEO Nikesh Arora introduced the term \"spending fatigue\" to explain softer demand. He cited customers’ sudden wariness about cybersecurity spending, as incidents continue to proliferate, despite larger customer spending.   Seeking Alpha Meanwhile, the company is also facing intensifying competition. Cyber-attacks come in many forms, and there are several different product segments that prevent, identify, and remediate in various parts of an enterprise. Legacy network security players like Cisco Systems (CSCO) and Fortinet (FTNT) are constantly innovating and expanding their cybersecurity offerings. These companies have a large installed base and brand recognition, making it challenging for PANW to win over new customers entirely. PANW may feature superior technology. But I believe customers still frequently hesitate to terminate contracts with existing providers to transition to PANW, as the transition could mean an overhaul of their cybersecurity platform. Meanwhile, the rise of cloud computing has fostered a new generation of cybersecurity startups specializing in cloud security solutions and pressuring PANW from an additional direction. These companies are often nimbler and develop solutions specifically designed for the cloud environment, potentially outpacing PANW in this growing market segment. PANW stock: 56x P/E is difficult to justify Due to these considerations, I think the market is very likely to be disappointed by its future growth. The current consensus EPS estimates for PANW still point to robust growth in the next few years, as shown in the chart below. To wit, analysts expect its EPS to reach $5.55 by the end of fiscal year 2024, representing a 25% increase over the prior year. Such strong growth is expected to continue, with EPS reaching $9.44 by the end of fiscal year 2027, reflecting a compound annual growth rate (“CAGR”) in the mid to upper teens. Due to the concerning signs mentioned above, I consider such projected growth rates to be too optimistic. Even IF – a big if, in my view - such growth rates are materialized, the current P/E is still difficult to justify. As aforementioned, the consensus estimate implies a FY1 P/E of 56.12x. This ratio would still be 33x by the fiscal year 2027, still too high in my view.   Seeking Alpha Other risks and final thoughts In terms of upside risks, there are some key differentiators that set PANW apart from competitors in the cybersecurity industry. Two factors are at the top of my list. First, PANW offers a comprehensive security platform, Prisma, which integrates many network security needs into a single offering. This holistic approach simplifies security management for customers and potentially creates a lock-in advantage. Second, PANW leverages machine learning (“ML”) extensively across its security products. While other cybersecurity companies are also incorporating ML, I consider PANW as a leader in this area (a view that seems to be shared by other media outlets, as you can see from this PRN report). For the differentiating factors, PANW enjoys a terrific margin (see the next chart below). The top-line growth may slow down, but its margin could further expand and partially offset the impacts of the topline slowdown. To conclude, I see several concerning signs from PANW’s recent earnings reports. These concerns point to more downside potential than upside risks in my mind in the near future. Given these concerns, I do think the recent insider selling reflects PANW’s business prospects in this particular case (even though I advise against such a connection in general).    Seeking Alpha","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.24.0","shortVersion":"4.24.0","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2437324459"}