Hey. It’s Rick from QuantFactory delivering our play for this week.
My eyes are on PANW 0.00%↑ and I will tell you why below, but first.
I closed my positions in GS 0.00%↑ following the call I made a few weeks back.
I played this one with vertical option spreads, catching a $5 move. (just an idea of how you can play them too)
Also, we got some signals on NVDA 0.00%↑, SMCI 0.00%↑ , and LLY 0.00%↑, in our Discord server, coming from our bots.
You should check them out as well.
The current situation at the company
Palo Alto Networks reported robust financial results, with total revenue hitting $1.98 billion, a solid 15% year-over-year increase. Their Next-Generation Security (NGS) Annual Recurring Revenue (ARR) soared to approximately $4 billion, up 47% from the previous year. These numbers underscore Palo Alto Networks' strong positioning in the cybersecurity market, fueled by increasing demand for advanced security solutions.
These results highlight PANW 0.00%↑, a solid position in the cybersecurity sector amidst increasing demand for advanced security solutions.
Strategically, Palo Alto Networks made significant moves, including a $500 million deal with IBM to acquire QRadar assets. This acquisition not only expands their cybersecurity offerings but also strengthens their market presence. However, the impact on revenue from this acquisition is expected to be modest for FY 2025 due to deferred revenue recognition, showcasing a careful approach to integration and financial management.
Financially, PANW improved its operating margins by 200 basis points compared to last year, with operating income growing by 25%.
Despite these gains, the company anticipates a slight dip in non-GAAP EPS for Q4 FY 2024, projecting earnings in the range of $1.40 to $1.42, a decrease of 1% to 3% year-over-year.
Looking ahead, I remain optimistic about the rest of FY 2024. With continued growth expected in billings, revenue, and next-generation security ARR, the company is well-positioned to capitalize on the increasing demand for cybersecurity solutions worldwide.
Enjoy trading ideas and signals in real-time?
Technical Setup
PANW recently exhibited a classic cup-and-handle pattern, suggesting strong potential for bullish momentum.
Since the end of June, the stock entered a consolidation phase, following the breakout of the handle. During this period, trading volume decreased, typical for such formations, signaling potential accumulation by institutional investors.
The breakout above the handle's high at $326 was accompanied by increased trading volume, confirming the bullish continuation. PANW swiftly surged past previous highs, to further validate the pattern's signal.
Looking ahead, I think there is still room for upside potential. Based on historical precedents of cup-and-handle patterns, which often lead to substantial price gains, PANW could see a continuation of its upward trajectory and fill the gap to $364.
Other important information
The SEC reports for June show significant buy pressure from institutional investors. This further confirms the Cup&Handle formation and serves as an additional bullish catalyst.
The consensus on Wallstreet is a Buy, while the stock is currently trading below the average price target of $341.
Conclusion
Palo Alto Networks presents a very good buy opportunity right now, driven by the strong fundamentals and the growing need for AI cybersecurity. The current accumulation phase which was preceded by the breakout of the Cup&Handle formation, can be a great level to enter and aim for at least closing the gap to $364.
You can send questions, comments, and suggestions by clicking the button.
Disclaimer: Please note that the information provided in this article is for general informational purposes only and does not constitute financial, legal, or professional advice. The information provided should not be relied upon as a substitute for financial, legal, or professional advice. Before making any decision, it is important to consider all relevant information and consult with a professional who can provide personalized advice based on your specific circumstances. The author and publisher of this article cannot be held liable for any actions taken based on the information provided. This is not a recommendation to buy or sell any specific securities or financial instruments.