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Why Palo Alto Networks Stock Jumped 14.6% in February

By Steve Symington - Updated Apr 11, 2019 at 8:40PM

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The cybersecurity platform specialist announced strong quarterly results and encouraging forward guidance last month. Here's what investors need to know.

What happened

Shares of Palo Alto Networks (PANW -0.07%) climbed 14.6% in February, according to data from S&P Global Market Intelligence, after the cybersecurity platform company released strong fiscal second-quarter 2019 results

To be sure, Palo Alto Networks stock popped nearly 10% on February 27, 2019, alone -- the first trading day after it announced its quarterly revenue had climbed 30.4% year over year, to $711.2 million, translating to adjusted net income of $147 million, or $1.51 per share (up from $1.05 per share in the same year-ago period). By comparison, the midpoints of Palo Alto Networks' guidance provided three months earlier called for earnings of $1.21 per share on revenue of $680 million.

Check out the latest earnings call transcript for Palo Alto Networks.

Palo Alto Networks booth at a trade show

Image source: Getty Images.

So what

Palo Alto Networks' revenue was driven by growth from both its product segment (up 32.6% to $271.6 million) and its subscription/support stream (up 29% to $439.6 million). Deferred revenue -- a key indicator of future sales growth -- also grew 26.6% to $852.5 million. Finally, Palo Alto Networks highlighted the decision of its board of directors the previous week to approve a new $1 billion share repurchase plan, valid through the end of next year.

Now what

If that wasn't enough, Palo Alto Networks sees revenue in the current third quarter of fiscal 2019 increasing 24% to a range of $697 million to $707 million -- compared to analysts' consensus models for sales near the low end of that range -- with adjusted earnings of $1.23 to $1.25 per share.

After coupling that solid outlook with Palo Alto Networks' relative outperformance in its fiscal second quarter -- and even with shares already up nearly 20% in January -- it was no surprise to see the stock continue to climb last month in response.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Palo Alto Networks. The Motley Fool has a disclosure policy.

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