Cramer's Morning Take: Palo Alto 2/26/24

Jim Cramer (0:01)

Hey, it's Cramer, and this is my morning take on the market from today's CNBC Investing Club Morning Meeting.

Jeff Marks (0:07)

Well, I know one that we talked a lot about on Saturday, and it's one we've been recommending to buy ever since it pulled back more than 20% after earnings. It's Palo Alto. Now that our restrictions were finally clear today, we got to buy. It is up big, and this is just a good reminder of why you can't necessarily just strictly follow trade alerts. You have to read the commentary that we put out. You have to listen to the morning meeting as well. Because then you would have been buying here in the 260s.

Jim Cramer (0:32)

Absolutely, we did very hard. We were trying to get people knowing, and we discussed this, the notion of our being frozen, and the importance of the emails, and there it is. I mean, it's very funny, not funny at all, but here. This is the increment that we did not get to perform as well as people.

Now a lot of people over time have said, and I want to express some humility here, we've given away $4 million, which is terrific, but also, I mean, we weren't able to catch this, and that often is, I did a study of how many times our lateness helped and hurt, and the lateness almost always hurt, okay?

Jeff Marks (1:08)

But as long as you followed the upgrade after earnings that we did and what we put out, whether it be in the homestretch and other articles, you would have known to buy, but even still, with the stock down from 360 before the quarter, still see it as a buying opportunity.

Jim Cramer (1:21)

Right, and I want to tell you why it is. This has really been ignored, and the stock's actually up. The UnitedHealth hack of their Optum division is apparently one of the biggest hacks in history. And it's not talked about, but they're scrambling to try to figure out how to make it so people can get paid for their medicines. Also, let's say you have to get an MRI.

They have to prove that ahead of time. I would like to know, they're being very coy about what can happen in that hack.

Jeff Marks (1:49)

Yeah, and that just underscores the importance of cybersecurity, and of course, the stock did get dinged because of this acceleration of his platformization strategy, him being the cash award, the CEO. But remember, he's saying, yes, a short-term dip in billing's revenue growth, but it's gonna lead to, due to higher discounting, but it will lead to a lot of long-term benefits, larger deals, longer contracts, stickier client relationships. As people go from maybe having one or two, three, four of Palo Alto's network solutions, they're gonna get the full menu of things. Yes.

Jim Cramer (2:25)

Yeah, and I think that that's going to be the way of the future, but you have to, as you switch your model, there is a down quarter there, and people can't stand there's a down quarter.

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