Palo Alto Networks Stock Tumbles 28% on Slowing Growth Despite Strong Long-Term Potential
-
Palo Alto Networks' stock price dropped 28% after Q2 earnings showed slowing revenue and billings growth along with reduced full-year guidance.
-
The company is shifting strategy to consolidate customers onto a unified platform, which will curb near-term growth but increase retention and future recurring revenue.
-
Bears see the stock as expensive given decelerating growth and insider sales; bulls see strong profitability, pricing power, and a path to over $15B in annual recurring revenue by 2030.
-
Palo Alto expects over 90% of revenue to be recurring in fiscal 2030 with operating margins in the low-to-mid 30s.
-
The stock could remain under pressure in the near term but presents a long-term play on the cybersecurity market.