Analysts Slash Palo Alto Networks Price Targets After Earnings

Credit Suisse set the lowest PANW price target overnight

by Karee Venema

Published on May 30, 2019 at 9:25 AM
Updated on May 30, 2019 at 9:38 AM

Palo Alto Networks Inc (NYSE:PANW) stock is down 6.2% in electronic trading, set to open near the $200 per share level for the first time since mid-January. This downside comes after the cybersecurity firm offered a weaker-than-expected current-quarter profit forecast due to acquisition-related costs and tariffs, though PANW did beat on both the top and bottom lines in its fiscal third quarter.

The news was met with an onslaught of price-target cuts, the lowest of which came from Credit Suisse, which dropped its target price to $185 from $190 -- a 14% discount to last night's close at $215.32. Overall, most analysts are bullish on PANW, with 85% of those in coverage maintaining a "buy" or better rating, and the average 12-month price target perched all the way up at $267.76.

Skepticism has been picking up in other corners of the the Street. For starters, short interest spiked 8.6% in the two most recent reporting periods to 5.51 million shares. This represents a healthy 6% of PANW stock's total available float, or 4.2 times the average daily pace of trading.

Elsewhere, yesterday's pre-earnings options traders appear to have sold to open weekly 5/31 245-strike calls -- either setting a short-term ceiling for Palo Alto Networks shares, or hoping to profit off a post-earnings volatility crush. The weekly 5/31 175-strike put has also seen a notable rise in open interest over the past two weeks, with Trade-Alert pointing to mostly buy-to-open activity here.

Since running into familiar resistance near $250 in early May, PANW shares have shed 14.2%. Today's pre-market downside suggests the stock is set to slice through short-term support at its 160-day and 200-day moving averages, and put itself on track for its worst month since March 2017.

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