PANW
ZS
The sell-off isn’t really about Palo Alto
Palo Alto Networks got caught in the crossfire on Wednesday after Zscaler’s outlook came in a touch light. That was enough to send cybersecurity names lower in sympathy, because apparently one company’s guidance can turn into a group text panic in a hurry.
The real villain: sector vibes
Zscaler beat third-quarter expectations, but its fourth-quarter revenue forecast of $875 million to $878 million missed Wall Street’s consensus. Management pointed to sales-leadership transitions, which is code for “we’re fixing some stuff, but the market heard ‘uh oh’ and hit the sell button.”
For PANW holders, the key question is whether this is a one-off wobble or a sign the whole cybersecurity trade is getting a little tired. Wedbush says it’s the former, calling Zscaler’s miss company-specific rather than a broad industry slowdown.
Meanwhile, the PANW bull case is still loud
Wedbush didn’t just defend Palo Alto Networks — it got more aggressive. The firm kept an outperform rating and raised its price target from $225 to $300, leaning on the company’s platformization story and the newly integrated CyberArk identity-security assets.
That matters because investors have been obsessed with whether PANW can keep bundling network, cloud, and identity security into one giant security buffet. Wedbush thinks the answer is yes, and says cross-selling is already happening in a meaningful way.
The next big test
Palo Alto is set to report third-quarter earnings on June 2, and the Street is looking for EPS of 72 cents on revenue of $2.94 billion. If the company can keep beating estimates — it’s done that for eight straight quarters on EPS — today’s dip could end up looking like a nervous shrug.
Big picture: this looks more like cybersecurity sector indigestion than a Palo Alto-specific heart attack.