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published in Blogs
Sep 10, 2019

Upward trend holds for Palo Alto Networks after earnings

Santa Clara-based Palo Alto Networks (NYSE: PANW) reported earnings on September 4. The software security firm beat both earnings and revenue estimates for the fiscal fourth quarter, but the forward guidance was a little below analysts’ estimates. The overall reaction from investors was a positive one as the stock jumped when it opened for trading on September 5.

Looking at the weekly chart for Palo Alto, we see that the stock was trading just above its 104-week (two years of data) moving average and just above a trend line that connects the lows from the last three years. The bounce after the earnings report allowed the two support levels to remain in place as the stock moved back above its 52-week moving average.

The weekly overbought/oversold indicators had dropped down in the four weeks heading in to the earnings report, but they hadn’t reached oversold territory. Over the last three and a half years, the 10-week RSI has only been in oversold territory on two occasions. The weekly stochastic readings have been there five times in the same time period.

Tickeron’s Technical Analysis overview shows several additional bullish signs for Palo Alto and those indications are based on the daily indicators. The stochastic indicators made a bullish crossover and that suggests the stock may be in a reversal from a downtrend to an uptrend. In 38 of 50 cases where Palo Alto's stochastic indicator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued uptrend are 76%.

Following a 3-day advance, the price is estimated to grow further. Considering data from situations where Palo Alto advanced for three days, in 261 of 356 cases, the price rose further within the following month. The odds of a continued uptrend are 73%.

The RSI Indicator points to a transition from a downtrend to an uptrend -- in cases where Palo Alto's RSI indicator exited the oversold zone, 10 of 14 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued Uptrend are 71%.

Fundamentally, the company has performed extremely well over the last few years. Earnings have grown by a rate of 46% annually over the last three years and they were up by 10% in the fourth quarter. Sales increased by 22% in the fourth quarter and have increased by an average of 28% per year over the last three years.

In addition to the strong earnings and sales growth, the company’s management efficiency measurements are well above average as well. The company boasts a return on equity of 42.3% and the profit margin is at 23.1%.

Sentiment toward Palo Alto is mixed at this time. Analysts are pretty bullish on the stock with 30 out of 35 analysts rating the stock as a “buy”. There are four “hold” ratings and one “sell” rating. This puts the buy percentage at 85.7% and that is well above average.

The short interest ratio is at 4.3 currently and that is slightly above average. I wrote about Palo Alto back in November ahead of another earnings report and the short interest ratio back then was at 2.8. This means that pessimism toward the stock is higher than the average stock and investors have been getting more bearish over the last nine months.

The put/call ratio for Palo Alto was at 1.35 ahead of the earnings report and that is higher than the average stock and is indicative of pessimism. There were 42,170 puts open at the time and 31,241 calls open.

With the combination of solid fundamentals, an upward trend on the stock, and an overall bearish sentiment from short sellers and option traders, Palo Alto looks poised to continue its upward trend.

Related Ticker: PANW

PANW's RSI Oscillator is staying in oversold zone for 2 days

It is expected that a price bounce should occur soon.

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Stochastic Oscillator demonstrated that the ticker has stayed in the oversold zone for 1 day, which means it's wise to expect a price bounce in the near future.

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where PANW advanced for three days, in of 366 cases, the price rose further within the following month. The odds of a continued upward trend are .

PANW may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.

The Aroon Indicator entered an Uptrend today. In of 314 cases where PANW Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .

Bearish Trend Analysis

The Momentum Indicator moved below the 0 level on February 21, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on PANW as a result. In of 80 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .

The Moving Average Convergence Divergence Histogram (MACD) for PANW turned negative on February 16, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 40 similar instances when the indicator turned negative. In of the 40 cases the stock turned lower in the days that followed. This puts the odds of success at .

PANW moved below its 50-day moving average on February 21, 2024 date and that indicates a change from an upward trend to a downward trend.

Following a 3-day decline, the stock is projected to fall further. Considering past instances where PANW declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

Fundamental Analysis (Ratings)

Fear & Greed

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 88, placing this stock better than average.

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating fairly steady price growth. PANW’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (20.921) is normal, around the industry mean (25.594). P/E Ratio (43.667) is within average values for comparable stocks, (139.070). Projected Growth (PEG Ratio) (1.358) is also within normal values, averaging (2.848). Dividend Yield (0.000) settles around the average of (0.087) among similar stocks. P/S Ratio (13.175) is also within normal values, averaging (75.056).

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

Notable companies

The most notable companies in this group are Microsoft Corp (NASDAQ:MSFT), Oracle Corp (NYSE:ORCL), Salesforce (NYSE:CRM), Adobe (NASDAQ:ADBE), Intuit (NASDAQ:INTU), Uber Technologies (NYSE:UBER), SERVICENOW (NYSE:NOW), Shopify (NYSE:SHOP), Palo Alto Networks (NASDAQ:PANW), Workday (NASDAQ:WDAY).

Industry description

Packaged software comprises multiple software programs bundled together and sold as a group. For example, Microsoft Office includes multiple applications such as Excel, Word, and PowerPoint. In some cases, buying a bundled product is cheaper than purchasing each item individually[s20] . Microsoft Corporation, Oracle Corp. and Adobe are some major American packaged software makers.

Market Cap

The average market capitalization across the Packaged Software Industry is 10.18B. The market cap for tickers in the group ranges from 291 to 3.05T. MSFT holds the highest valuation in this group at 3.05T. The lowest valued company is BLGI at 291.

High and low price notable news

The average weekly price growth across all stocks in the Packaged Software Industry was -2%. For the same Industry, the average monthly price growth was 3%, and the average quarterly price growth was 0%. IFBD experienced the highest price growth at 101%, while ACON experienced the biggest fall at -48%.

Volume

The average weekly volume growth across all stocks in the Packaged Software Industry was -60%. For the same stocks of the Industry, the average monthly volume growth was -66% and the average quarterly volume growth was -27%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 52
P/E Growth Rating: 74
Price Growth Rating: 50
SMR Rating: 83
Profit Risk Rating: 88
Seasonality Score: -36 (-100 ... +100)
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PANWDaily Signal changed days agoGain/Loss if shorted
 
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A.I.Advisor
published price charts
A.I. Advisor
published General Information

General Information

a provider of network security solutions

Industry PackagedSoftware

Profile
Fundamentals
Details
Industry
Computer Communications
Address
3000 Tannery Way
Phone
+1 408 753-4000
Employees
13948
Web
https://www.paloaltonetworks.com
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PANW and

Correlation & Price change

A.I.dvisor indicates that over the last year, PANW has been loosely correlated with CRWD. These tickers have moved in lockstep 62% of the time. This A.I.-generated data suggests there is some statistical probability that if PANW jumps, then CRWD could also see price increases.

1D
1W
1M
1Q
6M
1Y
5Y
Ticker /
NAME
Correlation
To PANW
1D Price
Change %
PANW100%
+5.33%
CRWD - PANW
62%
Loosely correlated
+0.19%
ZS - PANW
58%
Loosely correlated
+4.02%
COIN - PANW
47%
Loosely correlated
-2.88%
WK - PANW
46%
Loosely correlated
+1.64%
CLSK - PANW
45%
Loosely correlated
-3.86%
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