Palo Alto, Dropbox Post-Earnings Plunge Is Now Looking Like a Buying Opportunity
Some companies reported stronger-than-expected numbers this earnings season and rallied. Meanwhile, others fell short of expectations and faced selling pressure as markets went on to punish them.
However, that doesn't necessarily imply that stocks that faced post-earnings selloffs are no longer fit for long-term performance. As matter of fact, oftentimes, some of the best gains will come from finding stocks that are being unfairly punished.
This article delves into such unique scenario — i.e., companies that exceeded consensus forecasts for their financial performance but still received negative reactions from the stock market.
We'll delve deep into why the market responded negatively and evaluate whether the reaction was warranted. By doing so, we aim to determine if these stocks present promising buying opportunities.
Let's dig in:
Cybersecurity company Palo Alto (NASDAQ:PANW) reported satisfactory financial results on February 20, beating analysts' consensus on both EPS and sales.
Source: InvestingPro
However, the company also said it expected EPS of between $1.24 and $1.26 on sales of $1.95 to $1.98 billion for the next quarter, below analysts' forecasts of $1.29 per share on sales of $2.04 billion.
Forecasts were therefore only marginally disappointing, which might make it seem like the market's reaction was appropriate.
However, an analysis of the stock using InvestingPro data indicates that this isn't the case.
The Palo Alto Fair Share Value, which synthesizes 12 recognized financial models, values the stock at $304.1, more than 16% above Wednesday's closing price.
Source: InvestingPro
In addition, the 44 professional analysts who follow the stock display an average target of $337.30, translating into a bullish
Read more on investing.com
