Please ensure Javascript is enabled for purposes of website accessibility

Why Palo Alto Networks Shares Rose 20% Last Month

By Anders Bylund – Jun 5, 2020 at 10:07AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The COVID-19 pandemic turned out to be helpful to this network security expert.

What happened

Shares of Palo Alto Networks (PANW 1.76%) gained 19.7% in May, according to data from S&P Global Market Intelligence. The network security specialist closed out the month with a fantastic third-quarter earnings report.

So what

Palo Alto reported Q3 earnings of $1.17 per share on $869 million in sales, far ahead of Wall Street's estimates of $0.93 per share and $829 million, respectively. Top-line sales increased by 20% year over year.

Two yellow Ethernet cables are plugged into a cloud-shaped hub on a blue background and held together by a closed padlock.

Image source: Getty Images.

Now what

The COVID-19 pandemic gave Palo Alto a boost as workers stayed at home to get their jobs done remotely. Strong network security is a must under these circumstances, and CEO Nikesh Arora believes that the health crisis kick-started a secular trend.

"I think some of these trends are going to be here to stay," Arora said in the earnings call. "I suspect that most companies want to maintain the remote secure access capabilities coming out of the pandemic."

This idea makes sense because many companies have now gotten their first taste of widespread work-from-home operations. Workers have beefed up their home offices while businesses set up secure network connections and picked their favorite platforms for digital meetings and workflow management. Throwing all of that hastily installed progress away would be a step backward in many cases. Palo Alto Networks is one of several long-term beneficiaries of these remote-work policy changes.

Anders Bylund 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Palo Alto Networks, Inc. Stock Quote
Palo Alto Networks, Inc.
$166.68 (1.76%) $2.89

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.