Cybersecurity Stock Gearing Up For Massive Week

On Wednesday, BTIF upgraded Cloudflare Inc (NYSE:NET) to "buy" from "neutral," hiking its price target to $199 and noting the cybersecurity stock has "underappreciated long-term growth potential." Yesterday, Jefferies chimed in with a price-target cut to $185 from $225.

The flurry of mixed analyst attention comes ahead of the company's fourth-quarter earnings report, due out after the market closes on Tuesday, Feb. 10. In addition to the analyst activity, options traders are betting bullishly.

NET has a rather positive history of post-earnings moves, finishing the session after a report higher five times in the last two years, including a 13.8% pop on Halloween. Overall, the stock has averaged a move of 11% -- regardless of direction -- after the last eight reports. This time around, the options market is pricing in a much larger-than-usual move of 17.2% for Wednesday's trading. 

On Thursday, Cloudflare stock closed below its 320-day moving average for the first time since June 2024. While the shares are still up 12% year-over-year, they've taken a 37.5% haircut off their Nov. 3 record high of $260.

Call traders have been a steady presence. This is indicated by NET's 50-day call/put volume ratio of 1.84 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks two percentage points from an annual high.