"Headline numbers were solid: revenue grew 15% year-over-year to $2.59 billion, adjusted EPS of $1.03 beat expectations, and next-generation security ARR jumped 33% to $6.33 billion. But management trimmed its full-year profit outlook due to acquisition costs, and Q3 EPS guidance missed expectations, sending shares down 5-7% in after-hours trading."
"The bear case rests on three points: the $25 billion CyberArk deal added near-term EPS dilution; integrating CyberArk, Chronosphere, and Koi simultaneously creates real execution risk; and a forward P/E around 55x leaves little room for guidance misses."
"On February 17, it announced a $400 million acquisition of Koi Security, a one-year-old Israeli startup targeting agentic AI endpoint protection: autonomous AI agents that can download malicious files or compromise software supply chains without human involvement."
Palo Alto Networks experienced a significant stock decline of 21% year-to-date, trading at $144 against a 52-week high of $223.61. Q2 FY2026 earnings showed strong fundamentals with 15% revenue growth to $2.59 billion and 33% next-generation security ARR growth to $6.33 billion. However, management trimmed full-year profit guidance due to acquisition costs and missed Q3 EPS expectations, triggering a bearish Reddit sentiment of 35-38. Concerns centered on $25 billion CyberArk deal dilution, integration risks with multiple acquisitions, and a high 55x forward P/E ratio. Sentiment reversed to bullish 62 by February 22 as investors recognized the strategic value of acquisitions: CyberArk added identity security capabilities, while the $400 million Koi Security acquisition addressed emerging agentic AI endpoint protection threats.
Read at 24/7 Wall St.
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