Shares of Palo Alto Networks Inc (PANW -0.92%) are trading lower on Friday. The company's stock lost 0.9% as of market close but lost as much as 6.5% earlier in the day. The drop comes as the S&P 500 lost 0.1% while the Nasdaq composite was up 0.4%.
Palo Alto, a leading cybersecurity company, released its second-quarter 2025 earnings report on Thursday. The company met or exceeded Wall Street's targets, but the stock still slipped due to its high valuation and somewhat underwhelming guidance.
The tech company delivered earnings per share (EPS) of $0.81 on revenue of $2.26 billion, beating consensus estimates of $0.78 per share on $2.24 billion in sales.
The company expects 2025 EPS of $3.18 to $3.24. The consensus estimate was $3.23. While this falls within the company's range, it appears that considering the premium the company's stock carries, investors were hoping for more. Shares of Palo Alto are currently trading at 52 times earnings. Given this high valuation, delivering outsized growth is a must.
A vulnerability in Palo Alto's security software was discovered recently, and on Wednesday the company released a patch fixing the issue. While discovering and patching vulnerabilities isn't unusual in cybersecurity, technical details of the update were released that have made it easier to exploit the new version. The new vulnerability is considered "high severity," and as of this morning, it was facing exploitation attempts by malicious actors. The misstep may have put further pressure on the company's stock today.
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