Cybersecurity Stock Rebounds on Pre-Earnings Upgrade

Cybersecurity name Palo Alto Networks Inc (NASDAQ:PANW) is gearing up for its latest quarterly earnings report, due out after the close on Monday, August 18. Zacks Research expects earnings of 88 cents per share (a 17.3% year-over-year increase) on revenue of $2.5 billion (a 14.2% increase).

Chiming in ahead of the event, Piper Sandler upgraded the stock to "overweight" from "neutral," with a price-target hike to $225 from $200. In response, PANW was last seen up 4.1% at $175.10. 

On the charts, Palo Alto Networks stock has fallen sharply since its July 29 record high of $210.39, starting with a July 30 bear gap after news that the company is acquiring CyberArk for $25 billion. Today, however, the analyst in coverage at Piper Sandler cited that buyout as a potential catalyst. 

Looking back, PANW finished five of its last eight post-earnings sessions lower. The options pits are pricing in a 9.6% move, regardless of direction, for the following Tuesday, which is slightly larger than the 8.6% swing the stock as averaged over the last two years. 

PANW's 14-day relative strength index (RSI) of 25.2 sits firmly in "oversold" territory after the recent drop, indicating a short-term bounce could be imminent. Year-to-date, the equity is down 4%. 

When options trading, a premium-selling strategy could be the move, as the equity’s Schaeffer's Volatility Scorecard (SVS) checks in at a 13 out of 100.