By Angela Palumbo

Palo Alto Networks stock was falling sharply on Wednesday amid investor disappointment over the cybersecurity company's financial results -- but some analysts think now is still the time to buy.

Palo Alto on Tuesday evening reported third-quarter adjusted earnings of 80 cents a share on revenue of $2.29 billion. Analysts surveyed by FactSet were expecting earnings of 77 cents a share on revenue of $2.28 billion.

The cybersecurity company also said it expects fourth-quarter earnings in the range of 87 cents a share to 89 cents a share, compared to analyst estimates of 87 cents a share. The company also guided for current quarter revenue to be between $2.49 billion and $2.51 billion, while Wall Street was looking for $2.5 billion in sales.

Despite the third-quarter beat and guidance that was mostly in-line with expectations, Palo Alto stock was down 6.8% to $181.17 on Wednesday.

William Blair analyst Jonathan Ho wrote in a research note on Wednesday that the stock's drop reflects lower-than-expected growth in remaining performance obligations -- booked business the company expects to recognize as revenue in the future -- in the quarter. Palo Alto reported remaining performance obligations of $13.5 billion, which was below Wall Street estimates of $13.54 billion.

Several analysts still like Palo Alto stock after earnings. Of the 58 surveyed by FactSet, 42 say the stock is a Buy, 14 say it's a Hold, and two say it's a Sell.

Wedbush's Dan Ives rates the stock as Outperform with a $225 price target. He wrote in a note on Wednesday that the company continues to be one of his favorite cybersecurity names to own over the next 12 to 18 months. Ives added that he sees 2025 as a transition year for the company as he sees a strong deal flow and a more stable pipeline, writing that the company is also a "prime beneficiary of AI spending."

Truist Securities analyst Joel Fishbein wrote in a note on Tuesday night that he believe Palo Alto "has evolved into an end-to-end security platform and is one of the best positioned vendors in the security space."

"Customer expansion and new customer acquisition rates continue to be strong and will likely be the primary growth drivers in the model in the next phase of growth," Fishbein added. He rates the stock as a Buy with a $205 price target.

Write to Angela Palumbo at angela.palumbo@dowjones.com

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May 21, 2025 11:17 ET (15:17 GMT)

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