To The Moon

$Palo Alto Networks(PANW)$ is expected to release earnings on 20 Feb 2024 after the market closes (AMC).

Wall Street expects $1.30 in EPS and $1.97 billion in revenues as the company reports after market hours.

Billings, the amount invoiced to customers in a given period, has been a weak spot for Palo Alto in recent quarters. This metric grew just 16% year over year in the quarter that ended on Oct. 31. For the fiscal second quarter, Palo Alto expects to grow billings 15% to 18% with a tighter range of 16% to 17% expected for the full year.

There is one headwind: Prisma Cloud, the company's cloud application security product, is facing increased competition, leading to a deceleration in growth.

Technical though is showing an uptrend as PANW have been performing and trading above the 50-day MA period for a pretty long time.

Palo Alto Networks (PANW) Last Reported Earnings

PANW last reported earnings on 15 Nov 2023 after the market close (AMC). PANW shares declined -5.4% the day following the earnings announcement to close at 242.30. Following its earnings release, 96 days ago, PANW stock has drifted +51.2% higher.

From the time it announced earnings, PANW traded in a range between 242.98 and 380.84. The last price (366.41) is closer to the higher end of range.

Estimated implied straddle for upcoming earnings is 10.1%. We should be seeing a positive price effect after its earnings, because though there is headwinds faced by PANW, I believe the billings should be stable considering that enterprises are beefing up their cyber security defense.

Palo Alto Networks (PANW) Post Earnings Movement

The options market overestimated PANW stocks earnings move 50% of the time in the last 12 quarters. The predicted move after earnings announcement was ±8.0% on average vs an average of the actual earnings moves of 8.1% (in absolute terms). This shows you that PANW tended to be more volatile than the options market predicted for the earnings stock price reaction.

We could be seeing some price volatility for PANW, though I would expect some upside move post earnings.

Palo Alto Networks (PANW) Earnings Implied Volatility Crush

PANW's last earnings implied volatility (IV30) going into earnings was 47.9. The last time PANW released earnings, the implied volatility dropped to 29.6, resulting in an implied vol crush of 38%. 5 days after earnings, the 30 day IV was 26.6.

• Average Implied Volatility Crush For PANW Earnings: 27%

• Average 30 Day Implied Volatility 1 Day Before Earnings: 48.3

• Average PANW 30 Day IV for the Day of Earnings: 35.3

• Average 30 Day Implied Volatility 5 Days After Earnings: 33.4

Palo Alto Networks (PANW) Investors Sentiment

We are seeing a very positive investor sentiment for PANW, and we could see that there is a 8% increase in portfolios holding PANW. This shows that market is pretty positive about this cyber security company.

There is some concerns which I hope their guidance could help to address, on how they are going to manage their headwinds, Prisma Cloud, the company's cloud application security product, this cloud platform is facing increased competition, if this persists, it might pull down the revenue growth for PANW.

Summary

Based on what we have seen in the past and how PANW have been trading recently, I believe there are positive upside for this stock, even if the earnings came in flat, we could see an upside move in its stock price.

Appreciate if you could share your thoughts in the comment section whether you think PANW would give a positive guidance and how they planned to increase their billings?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.