Why Cloudflare Stock Could Keep Churning Higher

Friday's earnings report sent NET to near 2-year highs

Deputy Editor
Feb 12, 2024 at 11:59 AM
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Cloudflare Inc (NYSE:NET) is marginally higher today, last seen trading at $108.10. Shares of the cloud services provider soared to a nearly two-year high on Friday, touching an intraday high of $116 after the company reported a much better-than-expected fourth quarter. With help from a historically bullish signal now flashing, NET could have just what it needs to keep charging higher, too.

NET Chart February 122024

Digging deeper, Cloudflare stock's latest peak comes amid historically low implied volatility (IV). This has been a bullish combination in the past, according to Schaeffer's Quantitative Analyst Rocky White. White's data points to six other signals in the past five years when NET was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) sat in the 20th percentile of its annual range or lower.
 
This is currently the case with the stock's SVI of 46%, which stands in the 16th percentile of annual readings. The shares were higher one month later after 83% of those signals, averaging an 11.17% rise. From its current level, a move of similar magnitude would place Cloudflare stock above $120.
 

Analysts have yet to weigh in on the equity, but the majority of pessimistic. Of the 28 in coverage, 17 recommend a tepid "hold" or worse, and a shift in sentiment could bode well for the shares.

 

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