Option Trade 
Palo Alto Networks Inc (NYSE:PANW) Calls 
Thursday, 26th May, 2016

** OPTION TRADE: Buy the PANW July 15 2016 150.000 call at approximately $7.40. Place a pre-determined sell at $14.00.

Note: No protective stop losses added -- but if you wish to do so make it $3.00.

by Ian Harvey

May 26, 2016

Palo Alto Networks Inc (NYSE: PANW), a cyber security company, is scheduled to be releasing its Q316 earnings data today, Thursday, May 26th, after market closes. Analysts expect Palo Alto Networks to grow profit nearly 83% and to post earnings of $0.42 per share and revenue of $339.36 million for the quarter. Palo Alto Networks has set its Q3 guidance at $0.41-0.42 EPS.

Shares have been bobbing and weaving around their 50-day line for months now, but they remain below the 200-day since breaking support around the start of the year.

Palo Alto Networks last posted its earnings results on Thursday, February 25th. The network technology company reported $0.40 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $0.39 by $0.01. The firm earned $334.70 million during the quarter, compared to analyst estimates of $318.09 million. The business’s quarterly revenue was up 53.7% compared to the same quarter last year.

Even though the stock fell 0.3% to 145.69 Wednesday after finding resistance at the 50-day line, when it comes to cybersecurity, Palo Alto Networks is the best in terms of revenue growth.

This stock used to be much higher than current levels would tell you and the cybersecurity industry remains quite strong.

The company has a 50-day moving average of $143.37 and a 200-day moving average of $154.93. Palo Alto Networks Inc has a 1-year low of $111.09 and a 1-year high of $200.55. The firm’s market capitalization is $12.91 billion.

Palo Alto Networks Inc ‘s stock had its “buy” rating reaffirmed by equities research analysts at Nomura in a research report issued last Monday.

Also, several other equities research analysts have recently commented on the company.

• Robert W. Baird reaffirmed a “buy” rating and issued a $180.00 target price on shares of Palo Alto Networks in a research report on Tuesday, April 5th.

• Northland Securities began coverage on Palo Alto Networks in a research report on Thursday, January 21st. They set an “outperform” rating and a $200.00 price objective for the company.

• BTIG Research reissued a “buy” rating and set a $210.00 price objective on shares of Palo Alto Networks in a research report on Tuesday, April 5th.

There are thirty-seven analysts that have issued a buy rating and one has given a strong buy rating to the company. The company presently has a consensus rating of “Buy” and an average target price of $192.49.

Harvey’s Options Volatility Indicator

Conclusion

Palo Alto Networks allows firms, service providers and government bodies to impose tighter security measures through its network security platform. The company reported wider-than-expected loss in the second quarter, while revenues comfortably surpassed the Consensus Estimate.

Revenue growth seems to be steady, aided by strength across all its geographical regions and business segments. Also, customer wins coupled with expansion of the existing customer base positively impacted revenues. It is believed that the company's product refreshes will boost revenues, going forward.

The company is also keen on expanding its cloud exposure.

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

** OPTION TRADE: Buy the PANW July 15 2016 150.000 call at approximately $7.40. Place a pre-determined sell at $14.00.

Note: No protective stop losses added -- but if you wish to do so make it $3.00.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.



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