Palo Alto Networks shares jumped Monday evening after the cybersecurity firm posted a better-than-expected quarter and provided a first look at guidance for its next fiscal year. These strong results should ease concerns that the $25 billion CyberArk deal was masking a slowdown in the core business. Revenue for the company’s fiscal 2025 fourth quarter increased 16% year over year to $2.54 billion, exceeding the Wall Street consensus estimate of $2.5 billion, according to LSEG. Adjusted earnings per share (EPS) increased 27% to 95 cents in the quarter, ahead of the 88-cent LSEG consensus estimate. PANW YTD mountain Palo Alto Networks YTD Shares rose about 5% in after-hours trading to about $185. The move would put the stock back in positive territory for 2025, though the stock was still down from $204 when the company’s interest in CyberArk was first reported. Bottom line It’s been a rocky earnings season so far for the cybersecurity stocks, with Fortinet and Check Point getting hammered after reporting, and Cisco Systems’ security revenue significantly missing its consensus estimate. But Palo Alto Networks is a best-of-breed company, and it proved why Monday night with solid beats across all the key metrics: revenue, adjusted EPS, adjusted free cash flow margin, next-generation security annual recurring revenue (ARR), and total remaining performance obligation (RPO). The company also issued upside guidance for its fiscal year 2026. Now that we’ve seen the quarter and upbeat outlook, the CyberArk acquisition — which sent Palo Alto shares from $204.50 before the deal was announced to a low of about $167 about one week ago — shouldn’t be perceived as a defensive move to help a struggling core business. Palo Alto is playing offense by adding a leader in Identity security to its portfolio at a time when management believes the market will inflect in the next 12 to 24 months due to the emergence of agentic AI. “If you believe that we have been able to identify inflections in a good way at Palo Alto Networks, it is important for you to believe that we have this one right as well,” CEO Nikesh Arora said on the earnings call. Why we own it We believe cybersecurity is a secular growth market, as bad actors are relentless and companies simply cannot afford not to invest in defense. It is a never-ending arms race. We believe Palo Alto Networks, in particular, is uniquely positioned to thrive due to its best-in-class tools and a broad product portfolio that allows it to provide an all-encompassing “platform” solution to cybersecurity. Competitors : CrowdStrike (also a Club stock), Fortinet , Cisco Systems Last buy : Aug. 11, 2025 Initiation : Feb. 15, 2023 Any deal of this size comes with execution risk, creating an overhang on the stock until management proves otherwise. However, we have great confidence in Arora’s ability to deliver, given his extensive background in deal-making. That’s a big reason why we upgraded the stock to our 1 rating when…
Read More: Palo Alto beat and raise proves CyberArk deal was announced from strength