All seems to be well at cyber security company Palo Alto. Its recent earnings report was solid, the company received a few upgrades, so why did founder Nir Zuk sell 30, 000 shares on Thursday? The shares were sold at an average price of $126 and Zuk still owns a significant stake of 2, 695, 434 shares. Analysts at Northland Securities raised the price target from $120 to $135 with an outperform rating, and Barclays also upgraded the stock. Currently 23 analysts who cover Palo Alto rate it a Buy, two have a Strong Buy, and five analyst have a Hold rating.
Palo Alto beat Wall Street earnings estimates by 12 cents, and surpassed revenue targets, delivering $192 million, compared to the goal of $181 million. Revenue rose 50% on a year over year basis.
With the many high-profile security breaches, Palo Alto, a leader in the cyber security sector is likely to see increased demand. After such strong prospects and performance, why did Nir Zuk sell 30, 000 shares? First of all, that is a relatively small part of his position, secondly insiders sell for reasons separate from the stock’s performance (in fact, if stock rise, they often take gains), and investors don’t seem to be concerned, since the stock rose 1.6% on Monday. If investors and Wall Street don’t seem to be worried about a bit of insider selling, why should we worry?