On Monday, we started a series on the exploration of the options of companies operating in the cybersecurity sector of the tech industry. On Monday, we examined the options of Cisco Systems (CSCO), On Tuesday, we examined the options of Symantec (SYMC) and we looked at the options of Check Point Software Technologies (CHKP) yesterday.
Today, we will be exploring possibilities in the options of Palo Alto Networks Inc. (NYSE:PANW). Palo Alto with its market capitalization of $10.57 offers a network security platform that allows enterprises, service providers, and government entities to secure their networks. The core of its platform is the Company’s firewall that delivers natively integrated application, user, and content visibility and control through its operating system, hardware, and software architecture.
Why We Are Looking at PANW Options Today
Impressive Stock Performance
Shares of Palo Alto Networks have been gaining nicely in the last two years. In fact, the stock has already gained more than 140% since January 2013.
Shares of Palo Alto Networks have been soaring splendidly in the last couple of weeks as the stock soared from a 52-week low of $57.47 to a 52-Week high of $134.96. In fact, shares of Palo Alto marked the new 52-week high of $134.96 today and the stock is cruising with 0.64% gains to trade around $132.56 per share as at 11.42AM EST.
From the chart above, you will observe that shares of Palo Alto are trading above their 50 and 200-day moving averages, to show that the bullish momentum on the stock is still strong. Nonetheless, you’ll notice that the stock has an RSI of 63.61, which suggests that the stock might soon be entering overbought levels.
However, Palo Alto is set to release its second quarter (Q2 2015) results on March 2. If past earnings performance is an indication of future performance, we can expect the stock to rise higher on the strength of impressive second quarter results.
Optimistic Financial Outlook
Palo Alto has been having a great time on the revenue front in the last couple of quarters even though the increase in revenue is not yet evident in the company’s earnings. In the last reported quarter, (Q1 2015):
Palo Alto Networks reported that its total revenue grows 50 percent year-over-year to a record $192.3 million. The company reported that its billings grew by 52 percent year-over-year to a record $240.5 million.
In addition, the company’s product revenue rose by 34 percent year-over-year to $101.5 million and its recurring subscription revenue climbed 76 percent year-over-year to $43.7 million. More so, the deferred revenue grows 69 percent year-over-year to a record $470.7 million.
Interestingly, Palo Alto Network expects its revenue in 2015 to reach $850 to mark a 230% increase from the revenue of $255m that was reported in 2012 when the company had its IPO. It might interest you to know that the company has about $1.1B in cash; hence, its impressive revenue prospects and growth in its business fundamentals all within 2 years of an IPO suggests that investors’ love for this stock has a long way to go.
How to Trade PANW Options
I am optimistic about the prospects of PANW and I think you will do well to purchase PANW call options. I recommend that you buy the PANW Jun 2015 110.000 call (PANW150619C00110000) at an asking price of $28.50.
— Daily Option Alerts