Morgan Stanley analyst Keith Weiss said his Palo Alto Networks reseller checks are supportive of healthy refresh activity and he attributes the relative underperformance of the stock over the past 3 months largely to concerns around much tougher comparisons in the second half and a broader slowdown in security spending seen in the first three months of the year. Consensus estimates suggest a far more meaningful slowdown than his checks point to, said Weiss, who sees Palo Alto as well positioned to beat consensus expectations and sustain billings growth of over 20% through FY19. Ahead of the company's earnings report, Weiss keeps an Overweight rating and $290 price target on Palo Alto shares.

KeyBanc lowered the firm's price target on Palo Alto Networks to $355 from $380 on lower peer multiples, while keeping an Overweight rating on the shares. The firm says that at some point, the case for optimism needs to be backed up by some optimistic data, and its 1Q24 VAR Survey did not deliver it. IT budgets are still in hiding at this point, with just 50% of KeyBanc's respondents meeting or exceeding their goal in the Q1, the lowest quarterly reading since the heart of the pandemic, and sentiment from the follow-up calls with some individuals also has down ticked. The firm's Q4 2023 VAR survey was iffy, the outlook in 2024 from its CIO survey in January was also not great, its SMB survey was worse than expected, and now 2024 is off to a difficult start - "let's just call a trend a trend," KeyBanc adds.