Palo Alto Networks (PANW) is Cheap - Cowen

Cowen analyst, Gregg Moskowitz, is positive on Palo Alto Networks (NYSE: PANW) but few analysts have stepped forward to say the valuation looks cheap. However, after beating another quarter, considering the company's margin and FCF leverage, he believes the valuation actually looks inexpensive relative to growth.

F1Q revenue and EPS of $297m (+55% y/y) and $0.35 were well consensus estimates of $284m and $0.32.

Product revenue of $148m (-4% q/q and +46% y/y) was above the Street's $143m est., and services revenue of $150m (+15% q/q, 65% y/ y) exceeded the Street's $141m forecast.

Deferred revenue of $805m beat the Street's forecast of $788m, driving very strong billings growth of 61% y/y. Importantly, billings growth continues to outpace overall revenue growth.

Operating margin of 16.7% was up 600bps y/y.

PANW reported >28,000 end customers, subscription revs grew 69% y/y, and there are now >8,000 paid Wildfire subs (up over 1,000 q/ q for the fourth consecutive quarter).

F2Q revenue guidance of $314m-$318m (+44%-46% y/y), was above the Street's est. of ~$310m, while EPS of $0.38-$0.39 was slightly north of consensus estimates of $0.38.

Despite stating that the stock is cheap relative to growth, there was no change to $210 PT or Outperform rating.

For an analyst ratings summary and ratings history on Palo Alto Networks click here. For more ratings news on Palo Alto Networks click here.

Shares of Palo Alto Networks closed at $172.02 yesterday.

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