Palo Alto Networks Inc ( PANW ) stock is trading lower on Wednesday. The decline stems from negative industry spillover after cybersecurity peer Zscaler Inc ( ZS ) issued a softer fiscal fourth-quarter guidance during its earnings release.

Zscaler Guidance Sparks Sector Sell-Off

While Zscaler ( ZS ) beat third-quarter expectations with revenue of $850.48 million and adjusted earnings per share of $1.08, its fourth-quarter revenue outlook of $875 million to $878 million fell short of the $878.53 million consensus estimate. Management attributed the impact to recent sales leadership transitions, pulling down the broader cybersecurity sector in sympathy.

Wedbush Defends Palo Alto Networks

Despite the market anxiety, Wedbush Securities analyst Dan Ives dismissed fears of a broader sector slowdown in a Wednesday industry note.

“We view the ZS guidance shortfall after the bell as company-specific execution issues and not an indicator of broader sector issues,” Ives noted.

Wedbush maintained an outperform rating on PANW and aggressively raised its price forecast from $225 to $300, using a sum-of-the-parts (SOTP) valuation methodology.

The Power of the Idira Integration

Ives expresses strong confidence in Palo Alto Networks’ “platformization story” and its recent acquisition of CyberArk, now rebranded as Idira. According to the note, Idira positions PANW as the only vendor offering unified coverage across network, cloud, and identity security at scale. Channel checks show sales representatives actively introducing these solutions, with approximately 75% of recent deals involving cross-selling packages.

A Favorable Setup Ahead

Wedbush considers the Street’s revenue estimate of $2.943 billion beatable, citing strong momentum ahead of the company’s upcoming earnings print.

Palo Alto Networks Earnings Estimates

Palo Alto Networks ( PANW ) is set to report its third-quarter earnings on June 2, with analysts forecasting earnings per share (EPS) of 72 cents and revenue of $2.94 billion.

In the second quarter, the company posted EPS of $1.03, surpassing the consensus estimate of 76 cents. Revenue reached $2.59 billion, slightly ahead of expectations of $2.58 billion.

Notably, Palo Alto Networks ( PANW ) has outperformed EPS estimates for eight straight quarters.

PANW Price Action: Palo Alto Networks ( PANW ) shares were down 2.83% at $249.48 at the time of publication on Wednesday. The stock is approaching its 52-week high of $261.41, according to Benzinga Pro data.