Vaccine or Not, This Trend Isn't Going Away

A COVID-19 vaccine could be approved within weeks...

Pfizer (PFE) and BioNTech (BNTX) released data showing their vaccine candidate is 90% effective. Just a week later, Moderna (MRNA) released data showing that its own vaccine was 94.5% effective at preventing the virus. So it looks as though at least one vaccine could be approved very soon.

The U.S. Food and Drug Administration ("FDA") recently announced that its advisory committee would hold a meeting to discuss the emergency use authorization ("EUA") application from Pfizer and BioNTech. The meeting will be held on December 10. A meeting for Moderna's vaccine candidate is expected to follow shortly after.

But the approval of a vaccine doesn't mean that everyone will be able to get a dose... The EUA would approve the vaccine for frontline workers and the highest-risk individuals. In fact, the general population isn't expected to get the vaccine until the middle of 2021.

In the meantime, folks will likely have to keep working from home.

A recent survey from Enterprise Technology Research estimated that about 70% of corporate employees are currently teleworking. And some will never return to the office...

Next year, 34.4% of corporate employees are expected to work from home, according to the survey. That's more than twice the 16.4% of workers who worked remotely before the pandemic.

And that's a tailwind for today's company...

Palo Alto Networks (PANW) is a $28 billion network security giant. The company's system has been ranked as the top "firewall" security by globally respected research and advisory firm Gartner for eight straight years.

A firewall monitors Internet traffic in and out of a private network. Any time you type a web address into your browser, your computer makes a request that's fulfilled by a server (a broad computer system) connected to an external network – where you're more exposed to an attack by cybercriminals.

Palo Alto's firewall leads the pack now. And it's also the best-equipped company to offer the best next-generation firewall protection...

Traditional firewalls we've discussed so far only protect the "perimeter" of a private computer network.

As all the components that make up a network (the applications, the servers, and the data) move online into the "cloud," the next-generation firewalls will protect everything from the inside out...

Palo Alto's next-generation firewalls operate on "zero trust." The software that protects your computer doesn't trust any computer it's connected to. This includes those within your own network. That means if one connection in an internal network of five computers is compromised, the other four are not.

In some cases, Palo Alto's firewalls are physical devices that connect between outside networks (the Internet) and internal networks (an intranet). The firewall monitors traffic between the two. This type of protection is best suited to a company or other organization that keeps all its computers in a single building.

But Palo Alto also sells a software product, called Prisma, that provides the same level of protection without a physical device... As more companies expand remote-working capabilities, the Prisma firewall software has been in high demand.

Prisma's Software as a Service ("SaaS") model means it's sold as a subscription and delivered through a cloud application. That means it's accessible from anywhere in the world with an Internet connection, and Palo Alto gets to collect recurring revenue by providing the subscription.

What makes Prisma so relevant to the current business environment is that it automatically scales as new users join the network. When a customer needs to increase its network capacity, it doesn't need to buy more physical devices (or IT personnel to install them).

Even before the pandemic, this approach was useful for companies that have several locations and work largely from applications stored on the cloud. But it became even more crucial when many companies' employees abruptly began to exclusively telework...

Palo Alto has already taken steps to take advantage of this new environment. In March, Palo Alto announced it would buy cloud-based-security startup CloudGenix for $420 million. Palo Alto CEO Nikesh Arora cited "a permanent change in how organizations think about remote workforces" as a reason for the acquisition.

And the strength of Palo Alto's business was evident in its most recent quarterly earnings report...

The company's earnings per share ("EPS") were $1.62 versus Wall Street's $1.33 estimate. Revenue for the quarter was $946 million, beating the expectation of $921.7 million.

For the full year (Palo Alto's fiscal year ends July 2021), Palo Alto forecasts EPS of $5.70 to $5.80, above the estimate of $5.60. Palo Alto also said it expected revenue between $4.09 billion and $4.14 billion, beating the expectation of $4.02 billion.

Networks will always need protection. And now, unprecedented levels of teleworking have left some businesses vulnerable. That means Palo Alto has plenty of opportunity for growth... which should continue to boost its shares.

Sometimes investing is simple.