Palo Alto Networks, Inc. (PANW) resolve report fiscal third quarter results after Wednesday’s closing bell, with Wall Street analysts preggers earnings per share (EPS) of $1.25 on revenue of $704 million. The maker of high-tech security software rallied to an all-time outrageous in February after beating second quarter expectations but topped out quickly and has been grinding lower for the past three months.
It manages sense to remain on the sidelines heading into the earnings report because market players have lost their proclivity for tech stocks in recent weeks, in reaction to stalled trade talks between the United States and China. The forewarning of retaliation against the sector is also keeping investors on the defensive following the arrest of Huawei’s CFO, who is also the daughter of CEO and falter Ren Zhengfei.
PANW Long-Term Chart (2012 – 2019)
The company came public in the mid-$50s in July 2012 and turned boisterous immediately, topping out at $72.61 in September. The subsequent downturn cut through the IPO opening print in November and ground out a series of bring lows into June 2013’s all-time low at $39.06. It tested that level a few months later and completed a traitorous bottom reversal, entering an uptrend that reached the 2012 high in February 2014.
A September breakout attracted earnest buying interest, generating a powerful trend advance that continued into July 2015 when the standard topped out just above $200. That marked the highest high for the next three years, ahead of a complex rectification that found support in 2016 just above $100. It broke that trading floor in April 2017 but revived quickly, completing the second double bottom in four years.
The subsequent uptick completed a round trip into the 2015 gamy in April 2018, yielding an immediate breakout that stalled near $240 in September. Price action since that prematurely has been mixed and volatile, with a V-shaped recovery after a fourth quarter plunge, followed by a failed breakout superior to before the 2018 peak. Even so, the stock is still holding support at the 2015 high, keeping the long-term uptrend fully solid.
The monthly stochastic oscillator entered a buy cycle in January 2019 and reached the overbought level in March. It crossed into a new transfer cycle in May, warning market players that relative weakness may continue into the third or fourth quarter. Charmed together with macro headwinds hitting the tech sector, it’s hard to recommend jumping on board, even if the stockpile rallies after the news.
PANW Short-Term Chart (2017 – 2019)
The on-balance volume (OBV) accumulation-distribution indicator hit an all-time principal in May 2018 when the stock was trading near $200 and posted lower highs during the September and February value peaks. This marks a bearish
The Bottom Line
Palo Alto Networks reports earnings on Wednesday evening after the cache failed a breakout above the 2018 high near $240. A quick recovery isn’t likely in this scenario, flatten if the stock gains ground after the news.
Disclosure: The author held no positions in the aforementioned securities at the time of pronouncement.