Cybersecurity Stock Sees Pre-Earnings Options Barrage

The stock is slightly higher ahead of the event

Deputy Editor
Aug 18, 2023 at 10:19 AM
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Palo Alto Networks Inc (NASDAQ:PANW) stock is slightly higher this morning, last seen up 0.2% to trade at $207.92, just ahead of the tech name's fiscal fourth-quarter earnings report, due out after today's close.

The $205 level kept an earlier pullback in check, though former support at its 100-day moving average is keeping a lid on the stock's gains. Down nearly 20% this quarter, PANW maintains a 49.6% year-to-date lead.

Today's options activity leans bearish, though. So far, 11,000 puts and 7,200 calls have already been exchanged today, which is double the intraday average. The most popular position is the August 220 call, which expires at the close, followed by the weekly 8/25 180-strike put.

Over the last eight quarters, Palo Alto Networks stock finished every next-day session higher. This includes an impressive 12.5% bounce after its February report. The shares averaged an 8.7% next-session swing over the last two years, regardless of direction, but this time around the options pits are pricing in a bigger-than-usual move of 11.2%.

Members of the brokerage bunch are incredibly optimistic on the equity. Of the 36 in coverage, 33 call it a "buy" or better. What's more, the 12-month consensus price target of $253.26 is a 21.7% premium to current levels. 

Short sellers are exiting their positions, with short interest down 17% in the last two reporting periods, yet there's still room for this pessimism to unwind. The 18.73 million shares sold short account for 6.2% of the stock's available float, and would take almost three days to cover, at PANW's average daily pace of trading.

 

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