CHKP Profits Rise Alongside Ransomware Attacks

Analysts and options traders are pessimistic on the stock

Assistant Editor
Jul 26, 2021 at 9:16 AM
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Check Point Software Technologies Inc (NASDAQ:CHKP) announced an upbeat quarterly report this morning, with second-quarter earnings of $1.61 per share -- higher than Wall Street's anticipated $1.56 -- as well as better-than-expected revenue. According to the company, software sales were boosted by the recent surge in ransomware attacks, as well as other cybersecurity concerns. At last check, CHKP was up 0.5% to trade at $126.50. 

On the charts, the stock is still recovering from its steep early-February bear gap. However, the equity broke above a slew of short- and long-term moving averages this month, including the sharply ascending 10-day moving average. Year-to-date, Check Point Software stock is down 5.3% coming into today. 

Analysts are overwhelmingly bearish on CHKP, leaving plenty of room for a round of upgrades. Of the 17 in coverage, 13 carry a "hold" or worse rating on the stock, with the remaining four a "strong buy." 

The options pits are of similar sentiment, as per the security's 10-day put/call volume ratio of 1.42 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 98% of readings from this past year, indicating a much stronger-than-usual penchant for puts.

Meanwhile, short interest accounts for 6.2% of the stock's available float. In other words, it would take over six days to buy back these bearish bets at CHKP's average pace of trading -- plenty of pent-up buying power. 

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