Palo Alto Networks $PANW delivered another double beat this quarter, topping revenue and earnings expectations.
However, the market slammed the stock by nearly 7% instead of rewarding the results.
This marked the 5th time in the last 7 quarters that the stock has been punished for its earnings report.
That kind of streak tells you everything you need to know.
Despite solid growth, the reaction suggests investors are losing patience.
Concerns over slowing billings growth, rising competition in cybersecurity, and a general lack of upside guidance are weighing heavily.
A good report isn't enough when you add valuation sensitivity in a jittery tech tape.
At this point, the fundamentals aren’t the problem...
Expectations are.
So what else did we learn from yesterday's earnings reactions? Let’s dive into the details.
Here are the latest earnings reports from the S&P 500 👇
*Click the image to enlarge it
Keysight Technologies $KEYS had the best reaction score after reporting a double beat.
The company reported revenues of $1.31B, versus the expected $1.28B, and earnings per share of $1.70, versus the expected $1.65.
Palo Alto Networks $PANW had the worst reaction score after reporting a double beat.
The company reported revenues of $2.29B, versus the $2.28B estimate, and earnings per share of $0.80, versus the $0.77 estimate.
Now let's dive into the data and talk about what happened with these reports 👇
TGT has been punished for 4 of its last 5 earnings reports:
Target fell 5.2% after this earnings report, and here's why:
Comparable sales declined by 3.8% year-over-year, with store sales down 5.7% over the same timeframe.
Adjusted EPS dropped by 35.9% to $1.30 from $2.03 in the same quarter last year.
The management team expects this weakness to continue indefinitely.
This company has been one of the hottest disasters in retail over the last few years, and we expect that to continue.
The market consistently punishes the stock for each quarter's earnings reports, reiterating the negative fundamental trend.
The stock recently put the finishing touches on a textbook multi-year distribution pattern.
After carving out a multi-week bear flag and retesting the breakdown level, this earnings event is the catalyst for a fresh leg lower.
If TGT is below 103, the path of least resistance will likely remain lower for the foreseeable future.
PANW has been punished for 5 of its last 7 earnings reports:
Palo Alto Networks fell 6.8% after this earnings report, and here's why:
While Next-Generation Security ARR grew 34% year-over-year, this growth rate has steadily declined over the past several quarters (from 47% in Q3'24 to 34% in Q3'25). This is signaling a maturing growth profile and raising concerns about the future sustainability of high growth rates.
The cost of subscription and support revenue rose 19% Y/Y.
Both product and subscription/support gross margins declined Y/Y.
This company has been one of the best growth stories on Wall Street over the last decade, but that has been changing over the past few quarters.
Management claims to have a plan to reaccelerate the growth rate; however, the market isn't buying.
The stock has been churning sideways in a messy range for the last year.
Buyers recently tried to take control and drive the price to new all-time highs. This failed miserably...
With the price back in the box, we expect the stock will continue to be trendless.
If PANW is below 190, the path of least resistance will likely remain sideways for the foreseeable future.
Thank you for reading.
- The Beat Report Team
P.S.: Want to stop trading like a “dummy”? Join Jason Perz, Sean McLaughlin, and Joe Duarte live today at 2:30 pm Eastern as they break down the most common self-destructive trading behaviors — and how to fix them. Join LIVE and level up your game.
If you find our content valuable, we would greatly appreciate it if you could shareit with your friends, family, and colleagues. Your help in spreading the word is invaluable in supporting our work. Thank you to all of you who share!
