Legal Alpha
Long/short equity, special situations, momentum, contrarian

Short Palo Alto Networks, Downside Risk Based On Upcoming Patent Infringement Trial


On Feb 24, Juniper Networks (NYSE:JNPR) and Palo Alto Networks (NYSE:PANW) start a patent infringement trial, where Juniper is suing Palo Alto for infringement of seven patents. The suit implicates virtually all of Palo Alto's firewall technology products. Juniper is seeking treble damages and a permanent injunction, barring Palo Alto from selling the infringing technology.

This case presents a serious risk to Palo Alto. If Palo Alto loses this case, its stock could drop substantially on the negative headline - possibly 15%. If the court issues an injunction barring Palo Alto from selling its technology, the stock could drop sharply below significant resistance levels and key moving averages - perhaps more than 25% - as...

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