8/19/24 - $panw - r/r ambiguous at $334, sidelines into print8/19/24 :: VROCKSTAR :: NASDAQ:PANW
r/r ambiguous at $334, sidelines into print
- i think among the cyber names this one is the bluest of chips (notably after NASDAQ:CRWD had it's "snafu" - though i think there's more here than meets the eye and i've written about it)
- 3.5% cash gen (half of that is stock comp - but gets a pass b/c the company/ leadership and stock price are up to the right). this number is better than cash yields given growth.
- let's look at the expected EPS growth beyond just 24 vs 23 (because this year is over as far as how wallstreet looks at things), so 25/24 and 26/25... low teens growth. this is hardly "great" and i think part of what informs my sidelines. if it were even high teens or better 20s, i'd say "scarce and growth good enough". but what's weird here is that a beat probably raises the '24 # and to a slightly lesser extent '25 and '26 which further grow multiples on stock and looks more expensive.
- on the other hand, a miss and this thing looks like it trades at 60x this year and 54x '25... which isn't cheap for these EPS growth rates in the outer years we're referring to.
- so ambiguious b/c this asset for all intents and purposes *should* continue to trend higher. but the valuation requires a sizeable beat to maintain it's upward trajectory. the chart has a nice gap to fill higher in the $360s which is den in play (that's 10% higher, nothing to scoff at). on the other hand, a miss probably does a similar move. if something's truly broken or we we get a weird guide, maybe 15% off. I have a hard time understanding why this thing sells off 20%. so the risk is pretty balanced. for that reason, i typically don't like to take shots. put a gun to my head... stock is up on earnings. but it's a 6/10 conviction guess and i typically just watch these from the sidelines and act ex post.
lmk if you see it differently.
V
