3 Cybersecurity Stocks Surging on Bull Notes

Outperforming OKTA seems overdue for more upgrades

by Karee Venema

Published on Oct 3, 2019 at 2:41 PM

It's been a wild day of trading on the U.S. stock market, with the major benchmarks last seen in the green. One sector in particular making a notable move today is cybersecurity, after SunTrust Robinson projected cloud software spending will accelerate at a faster-than-expected clip through 2025, and issued bull notes on several individual names, including CrowdStrike Holdings Inc (NASDAQ:CRWD), Okta Inc (NASDAQ:OKTA), and Zscaler Inc (NASDAQ:ZS). Here's a quick look at how the shares of CRWD, OKTA, and ZS are reacting to the upbeat analyst attention.

CrowdStrike Options Bulls Eye a Big Breakout

SunTrust Robinson upgraded CrowdStrike to "buy" from "hold," and maintained its $80 price target  -- a 41% premium to last night's close -- with the analyst in coverage citing the company's impressive growth rate. In reaction, CRWD stock is up 7% to trade at $60.58, but remains well below its Aug. 20 record high of $101.88.

Options traders have been betting on more upside for the stock, too. While the October 60 call is the most heavily populated CRWD strike, while the weekly 10/4 60-strike call is most active today. Data points to buy-to-open activity at both options, meaning speculators are anticipating a sharper move above $60 in the near term.

Okta Stock Bounces from Bullish Trendline

Okta stock was upgraded to "buy" from "hold' at SunTrust Robinson, with the brokerage firm boosting its price target to $134 from $130 -- representing an upside of 30% to Wednesday's close. The equity has already surged 72.7% year-to-date, up 7.3% at $110.59 today, bouncing off its 200-day moving average.

Per Schaeffer's Senior Quantitative Analyst Rocky White, this trendline has had bullish implications in the past, with OKTA shares averaging a one-month gain of 9.1% following the three previous tests of support here, with all three returns positive. A bigger rally could draw more bull notes, too, which could bring more buyers to OKTA's table. Prior to today, seven of 17 analysts called the outperforming stock a lukewarm "hold."

Shorts Have Been Betting Against Zscaler Stock

SunTrust Robinson initiated coverage on Zscaler with a "buy" rating and $73 price target -- a 55% premium to last night's close -- saying the company's security platform is revolutionizing the marketplace. In response, ZS stock is up 4.1% at $48.85, edging above its 10-day moving average in intraday trading, a trendline not toppled on a daily closing basis since Aug. 13.

The shares are still down more than 45% since their July 26 record high of $89.54, pressured by a steady increase in short selling. Specifically, short interest jumped 28% in the Aug. 15 through Sept. 15 reporting periods to 8.02 million shares. This represents a healthy 12.4% of ZS stock's available float, or 2.5 times the average daily trading volume.


The best of Schaeffer's market analysis in a 5-minute weekly read.



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

What's Next for the American Wealth Gap
Porter Stansberry is predicting a major change in the American economic system.
Merck Options Traders React to Stock Pullback
MRK is trading down on rival BMY's success
Under Armour Stock Up On C-Suite Shakeup
UAA options traders could be using calls to hedge
What's Next for the American Wealth Gap
Porter Stansberry is predicting a major change in the American economic system.