Barracuda Networks Stock Tests Key Chart Levels Ahead of Earnings

Barracuda Networks will report quarterly earnings after the close on Monday

Jul 7, 2017 at 2:18 PM
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Cybersecurity stocks are outperforming today, and that includes Barracuda Networks Inc (NYSE:CUDA). The shares were last seen trading 5% higher at $23.78, as they continue to trade atop a trendline of higher lows that's been in place since mid-April. Moreover, CUDA stock's intraday low is $22.61, which corresponds with a 23.6% retracement of its 2016 low and 2016 high. This level has served as support on several occasions since last August. 

cuda stock

Shareholders will be hoping these technical levels hold as support, with Barracuda set to report earnings after the close on Monday. At the very least, they'll want something better than last quarter's post-earnings performance, when the shares fell 15.8% in the session after earnings. Options traders are expecting another major move, though, pricing in a 15.5% swing for Tuesday's session. 

Leading up to the event, options traders have been displaying bearish tendencies. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day put/call volume ratio of 1.13, which ranks in the 82nd annual percentile. In other words, put buying has been more popular than normal on Barracuda Networks stock, relative to call buying. And even though peak open interest resides at the July 22.50 call, data from the major exchanges shows mostly sell-to-open activity here. 

On the other hand, this is also the most popular option in today's session, and it appears buy-to-open activity is taking place. So some traders are betting on extended upside for CUDA stock in the weeks ahead. Overall, Barracuda Networks call options are trading at two times the expected intraday pace. 

Elsewhere, analysts remain in the bulls' corner. Specifically, 11 of 16 rate CUDA stock a "buy" or "strong buy," with zero "sell" recommendations on the books. Moreover, the shares have an average 12-month price target of $28.56 -- representing annual-high territory. 

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