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Why Palo Alto Networks Inc. Stock Fell 18.7% in October

By Steve Symington - Updated Nov 12, 2018 at 9:19PM

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The cybersecurity leader fell victim to its hefty year-to-date gains, reaction to its reaffirmed guidance, and the broader market's pullback.

What happened

Shares of Palo Alto Networks Inc. (PANW 1.52%) declined 18.7% in October, according to data from S&P Global Market Intelligence, both as the broader market fell and the company reiterated its latest quarterly financial guidance.

With shares already up more than 50% year to date through the first nine months of 2018, roughly half of Palo Alto Networks' drop in October came in the first week of the month -- that is, when major stock market indexes began to pull back from all-time highs led by declines in the tech sector. 

Palo Alto Networks booth at trade show.

IMAGE SOURCE: PALO ALTO NETWORKS.

So what

Palo Alto Networks shares continued to drift lower to close October after the company reaffirmed its fiscal first-quarter 2019 guidance provided in September. That outlook calls for quarterly revenue in the range of $625 million to $635 million, or year-over-year growth of 26% at the midpoint, with adjusted earnings per share of $1.04 to $1.06.

At the time, however, it appeared the market wanted even more; consensus estimates had predicted earnings and revenue would arrive near the high end of Palo Alto Networks' respective guidance ranges.

Now what

As it stands, Palo Alto Networks is poised to release its final fiscal first-quarter 2019 results on Thursday, Nov. 29, 2018. Barring yet another update between now and then, I suspect the stock will only continue to ebb and flow along with the wider tech sector.

 

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