Theme, fundamentals, and technicals all point to higher highs for PANW.
Theme: Not a week goes by without some new and more serious hack storming the media and forcing company budgets to accommodate increased spending on IT security. Both the threat of hacks and the increase in security spending aren't likely to recede anytime soon.
Fundamentals: Off the back of better than expected results and forward guidance from Fortinet, PANW is screaming higher again. In May, Oppenheimer published a report (goo.gl/aNr934) that PANW channel checks were "tracking higher than the Company's mid-point guidance for Q3 revenue" and "90 percent of contacts indicated that their Palo Alto business is beating expectations for the quarter."
Technicals: PANW has completed two near identical "W bottom" patterns this year, each racking up 20%+ moves higher. We're seeing all four legs of that pattern repeat for a third time. Even a repeat of just the last pattern's price action predicts a pattern high of 213.38. This coincides nicely with the 61.8% fib extension at 213.32. That said, each leg's movement in this iteration of the pattern has been successively larger in magnitude than the prior patterns, so it's entirely possible we see the pattern end higher than the 213 level. However, it's important to keep in mind that today, PANW traded above 200 - a psychologically important level and one where it's easy for investors to say, 'hey let's take some profits', and therefore might be in for a pause or minor pullback.
Strategy: Implied vol is comparatively still very low (~15th percentile), although quickly increasing (charts.stocktwi...al_40158663.png?1437668507...). There's still time to put on or add to an options strategy to take advantage of both price appreciation and increased vol. PANW doesn't report results until September. We should continue to see PANW move higher on the back of competitor results between now and September. Look to ride the grind higher ahead of PANW earnings and re-evaluate your strategy for positioning through Q3 results. Let vol be your guide!
Theme: Not a week goes by without some new and more serious hack storming the media and forcing company budgets to accommodate increased spending on IT security. Both the threat of hacks and the increase in security spending aren't likely to recede anytime soon.
Fundamentals: Off the back of better than expected results and forward guidance from Fortinet, PANW is screaming higher again. In May, Oppenheimer published a report (goo.gl/aNr934) that PANW channel checks were "tracking higher than the Company's mid-point guidance for Q3 revenue" and "90 percent of contacts indicated that their Palo Alto business is beating expectations for the quarter."
Technicals: PANW has completed two near identical "W bottom" patterns this year, each racking up 20%+ moves higher. We're seeing all four legs of that pattern repeat for a third time. Even a repeat of just the last pattern's price action predicts a pattern high of 213.38. This coincides nicely with the 61.8% fib extension at 213.32. That said, each leg's movement in this iteration of the pattern has been successively larger in magnitude than the prior patterns, so it's entirely possible we see the pattern end higher than the 213 level. However, it's important to keep in mind that today, PANW traded above 200 - a psychologically important level and one where it's easy for investors to say, 'hey let's take some profits', and therefore might be in for a pause or minor pullback.
Strategy: Implied vol is comparatively still very low (~15th percentile), although quickly increasing (charts.stocktwi...al_40158663.png?1437668507...). There's still time to put on or add to an options strategy to take advantage of both price appreciation and increased vol. PANW doesn't report results until September. We should continue to see PANW move higher on the back of competitor results between now and September. Look to ride the grind higher ahead of PANW earnings and re-evaluate your strategy for positioning through Q3 results. Let vol be your guide!