Billings growth helped stock rise
In this series, we’ve looked at Palo Alto Networks’ (PANW) fiscal 2Q16 performance and factors that were instrumental in the company’s double-digit revenue and billings growth and gave the company an edge over its peers.
Due to its diversified business model and double-digit growth in billings and revenues, PANW stock has had a successful run in 2015. However, 2016 didn’t start out on a very positive note, as you can see in the price graph below. PANW’s falling stock got a new lease on life and rose more than 15% since the company announced its results on February 26, 2016.
The company posted 64% and 62% growth in revenues and billings, respectively. Improved guidance also contributed positively toward the rise in stock.
Palo Alto Networks’ healthy billings growth is worth noting here, as the cybersecurity space is going through a difficult time over the possibility of a slowdown in security spending in 2016.
Factors that led to fall of PANW stock
In early February 2016, cybersecurity companies FireEye (FEYE), CyberArk Software (CYBR), and Proofpoint (PFPT) saw their stocks fall. The fall was the result of Tableau Software’s (DATA) and LinkedIn’s (LNKD) weaker-than-expected guidances for 2016. Tableau Software and LinkedIn cited a slowdown in customer spending as the primary reason for their soft outlook. PANW stock received a further blow when Cleveland Research stated that Palo Alto Networks might not be able to keep its high double-digit revenue growth momentum going.
Investors who want to gain broad-based exposure to Palo Alto Networks can consider investing in the iShares US Technology ETF (IYW). IYW has an exposure of 46.7% to application software and invests ~0.34% of its holdings in Palo Alto Networks.