ACE study tips - Accredited Configuration Engineer (ACE) Updated: 2023

A whale with a lot of money to spend has taken a noticeably bullish stance on Palo Alto Networks.

Looking at options history for Palo Alto Networks PANW we detected 16 strange trades.

If we consider the specifics of each trade, it is accurate to state that 56% of the investors opened trades with bullish expectations and 43% with bearish.

From the overall spotted trades, 2 are puts, for a total amount of $141,214 and 14, calls, for a total amount of $863,512.

What's The Price Target?

Taking into account the Volume and Open Interest on these contracts, it appears that whales have been targeting a price range from $165.0 to $250.0 for Palo Alto Networks over the last 3 months.

Volume & Open Interest Development

In terms of liquidity and interest, the mean open interest for Palo Alto Networks options trades today is 821.0 with a total volume of 551.00.

In the following chart, we are able to follow the development of volume and open interest of call and put options for Palo Alto Networks's big money trades within a strike price range of $165.0 to $250.0 over the last 30 days.

Palo Alto Networks Option Volume And Open Interest Over Last 30 Days

Biggest Options Spotted:

Symbol	PUT/CALL	Trade Type	Sentiment	Exp. Date	Strike Price	Total Trade Price	Open Interest	Volume
PANW	CALL	SWEEP	BULLISH	01/19/24	$220.00	$132.0K	1.3K	100
PANW	CALL	SWEEP	NEUTRAL	06/21/24	$195.00	$122.4K	1.4K	25
PANW	PUT	TRADE	BULLISH	01/17/25	$193.33	$106.5K	278	40
PANW	CALL	TRADE	BULLISH	06/02/23	$187.50	$101.3K	145	0
PANW	CALL	SWEEP	BULLISH	01/17/25	$250.00	$99.7K	36	30

Where Is Palo Alto Networks Standing Right Now?

• With a volume of 879,411, the price of PANW is up 3.29% at $218.66.
• RSI indicators hint that the underlying stock may be overbought.
• Next earnings are expected to be released in 83 days.

What The Experts Say On Palo Alto Networks:

• Credit Suisse has decided to maintain their Outperform rating on Palo Alto Networks, which currently sits at a price target of $260.
• Stifel has decided to maintain their Buy rating on Palo Alto Networks, which currently sits at a price target of $240.
• Wells Fargo has decided to maintain their Overweight rating on Palo Alto Networks, which currently sits at a price target of $265.
• Rosenblatt downgraded its action to Buy with a price target of $250
• Wedbush has decided to maintain their Outperform rating on Palo Alto Networks, which currently sits at a price target of $225.

Options are a riskier asset compared to just trading the stock, but they have higher profit potential. Serious options traders manage this risk by educating themselves daily, scaling in and out of trades, following more than one indicator, and following the markets closely.

If you want to stay updated on the latest options trades for Palo Alto Networks, Benzinga Pro gives you real-time options trades alerts.

Heading into the company's latest earnings update, Fool.com contributor and finance professor Parkev Tatevosian had Palo Alto Networks (PANW 4.40%) stock rated as a buy. Tune in to find out if that recommendation changed.

*Stock prices used were the afternoon prices of May 26, 2023. The video was published on May 28, 2023.

Parkev Tatevosian, CFA has positions in Palo Alto Networks. The Motley Fool has positions in and recommends Palo Alto Networks. The Motley Fool has a disclosure policy.

Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through fool.com/parkev, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

A house in Palo Alto that sold for $6.2 million tops the list of the most expensive residential real estate sales in Palo Alto in the past week.

In total, 13 residential real estate sales were recorded in the area during the past week, with an average price of $3.7 million. The average price per square foot ended up at $1,852.

The prices in the list below concern real estate sales where the title was recorded during the week of May 15 even if the property may have been sold earlier.

10. $2.9 million, single-family home in the 800 block of Meadow Drive

The 1,389 square-foot single-family residence in the 800 block of Meadow Drive in Palo Alto has been sold. The transfer of ownership was settled in May and the total purchase price was $2,850,000, $2,052 per square foot. The house was built in 1956. The house features three bedrooms and two bathrooms.

9. $2.9 million, single-family residence in the 900 block of Hutchinson Avenue

The property in the 900 block of Hutchinson Avenue in Palo Alto has new owners. The price was $2,850,000. The house was built in 1948 and has a living area of 1,315 square feet. The price per square foot is $2,167. The house features three bedrooms and one bathrooms.

8. $3.1 million, detached house in the 1100 block of Webster Street

The sale of the single family residence in the 1100 block of Webster Street in Palo Alto has been finalized. The price was $3,120,000, and the new owners took over the house in May. The house was built in 1924 and has a living area of 1,207 square feet. The price per square foot was $2,585. The house features three bedrooms and one bathrooms.

7. $3.3 million, single-family house in the 900 block of Van Auken Circle

The sale of the single-family home in the 900 block of Van Auken Circle, Palo Alto, has been finalized. The price was $3,300,000, and the house changed hands in May. The house was built in 1951 and has a living area of 1,688 square feet. The price per square foot was $1,955. The house features six bedrooms and two bathrooms.

6. $3.8 million, detached house in the 100 block of Lois Lane

The 2,069 square-foot detached house in the 100 block of Lois Lane, Palo Alto, has been sold. The transfer of ownership was settled in May and the total purchase price was $3,820,000, $1,846 per square foot. The house was built in 1951. The house features three bedrooms and three bathrooms.

5. $3.9 million, single-family home in the 800 block of Seale Avenue

The property in the 800 block of Seale Avenue in Palo Alto has new owners. The price was $3,900,000. The house was built in 1950 and has a living area of 2,611 square feet. The price per square foot is $1,494. The house features three bedrooms and three bathrooms.

4. $4.7 million, single-family residence in the 100 block of California Avenue

A sale has been finalized for the single-family house in the 100 block of California Avenue in Palo Alto. The price was $4,700,000 and the new owners took over the house in May. The house was built in 1930 and the living area totals 1,930 square feet. The price per square foot ended up at $2,435. The house features four bedrooms and four bathrooms.

3. $5.5 million, single-family house in the 800 block of Seale Avenue

The 3,141 square-foot single-family home in the 800 block of Seale Avenue in Palo Alto has been sold. The transfer of ownership was settled in May and the total purchase price was $5,475,000, $1,743 per square foot. The house was built in 1949. The house features four bedrooms and four bathrooms.

2. $6.2 million, single-family residence in the 800 block of Boyce Avenue

The sale of the single family residence in the 800 block of Boyce Avenue in Palo Alto has been finalized. The price was $6,225,000, and the new owners took over the house in May. The house was built in 2000 and has a living area of 3,496 square feet. The price per square foot was $1,781. The house features four bedrooms and four bathrooms.

1. $6.2 million, detached house in the 900 block of Mockingbird Lane

The property in the 900 block of Mockingbird Lane in Palo Alto has new owners. The price was $6,235,000. The house was built in 1974 and has a living area of 2,820 square feet. The price per square foot is $2,211. The house features three bedrooms and two bathrooms.

The property located in the 2400 block of Ross Road in Palo Alto was sold on May 1, 2023 for $2,272,500, or $1,607 per square foot. The house, built in 1947, has an interior space of 1,414 square feet. The property features three bedrooms, one bathroom, and a garage, as well as a pool in the backyard and one parking space. The unit sits on a 6,954-square-foot lot.

These nearby houses have also recently been purchased:

• On Oregon Avenue, Palo Alto, in December 2022, a 1,160-square-foot home was sold for $2,112,500, a price per square foot of $1,821. The home has 3 bedrooms and 2 bathrooms.
• A 1,576-square-foot home on the 2500 block of Ross Road in Palo Alto sold in November 2022, for $3,160,000, a price per square foot of $2,005. The home has 4 bedrooms and 2 bathrooms.
• In July 2022, a 1,868-square-foot home on Warren Way in Palo Alto sold for $3,160,000, a price per square foot of $1,692. The home has 3 bedrooms and 2 bathrooms.

After yet another exceptional financial update, shares of Palo Alto Networks (PANW 4.40%) are up a whopping 50% so far in 2023. The cybersecurity pure-play leader has some lofty goals and keeps meeting and exceeding them, as industries of all kinds are in need of PANW's software. 

Nevertheless, with the stock price rising rapidly as of late, shares are fetching an increasingly "expensive" premium. Is it too late to buy Palo Alto Networks stock now? 

Cybersecurity soars past recession fears

As was the case late last year, the story in 2023 remains one of slowing economic growth and fears of recession. Resources, particularly of the financial variety, are being conserved by many businesses in anticipation of tough times. But cybersecurity remains in high-growth mode. 

Palo Alto Networks just proved it. Third quarter fiscal 2023 (the three months ended in April) revenue increased 24% year over year to $1.7 billion, driven once again by its "next-gen" software-based security offerings. With three-quarters of the current fiscal year down, Palo Alto has reported revenue growth of 25% to $4.9 billion.  

This builds on an impressive run that started even before the pandemic-fueled boom, as organizations began migrating en masse to cloud computing and adopting new security tools along the way. 

Data source: Palo Alto Networks.

Clearly, cybersecurity has been a secular growth trend, and PANW has been helping lead the charge higher. It remains far and away the top dog in this space, beating Fortinet and Crowdstrike Holdings in terms of total revenue and market cap. 

Data by YCharts.

How long can Palo Alto Networks sustain growth?

The question now becomes a matter of how long can PANW sustain its rate of expansion? It's already a big business -- can it really keep growing at a north-of-20% revenue clip?

Perhaps it can. Tech-titan Microsoft revealed earlier this year it generated $20 billion in annualized cybersecurity sales, double the amount in 2020.

Of course, Microsoft has the benefit of distribution, with Windows installed on billions of devices around the world. Its cloud infrastructure service Azure also is one of the largest around.

But Palo Alto Networks is more than holding its own. The company reported a 38% increase in deferred revenue (money collected for services that have yet to be provided) to $8.1 billion. This helps underpin management's guidance for 25% to 27% year-over-year growth in the final quarter of fiscal 2023 and could be an indication of momentum carryover into 2024.

Key to its growth are the numerous software-based offerings (lumped into the "next-gen security" tag) that PANW has. Customers are looking for simplicity and asset-light services they can pay for over time. With its software offerings still growing at a blistering pace (annualized revenue grew 60% last quarter), Palo Alto Networks looks like it will remain a high-growth player in cybersecurity for the foreseeable future.

Is the stock a buy?

After the accurate run-up in stock price, Palo Alto Networks trades for 25 times trailing-12-month free cash flow. Employee stock-based compensation remains high ($871 million so far this fiscal year) but is decreasing as a percentage of revenue. Share repurchases to offset stock-based compensation were on hold this last quarter.

Also of note, the balance sheet is about to look a bit different. In July, half of PANW's convertible debt of $3.68 billion will be paid off with cash and equivalents on balance, with the balance paid off in issuance of new shares (which has already been accounted for in guidance). Once this event is complete, this will be a debt-free company. PANW had nearly $4 billion in cash and short-term investments on balance at the end of April and another $2.7 billion in long-term investments.

This cybersecurity leader still looks reasonably priced on a free-cash-flow basis, though it isn't the value it was at the start of this year. I'm not adding to my existing position at this juncture, given the blistering pace of the share-price appreciation this year. However, this remains a company you should keep tabs on if you think the cybersecurity market will remain in high-growth mode in the years ahead.

Nicholas Rossolillo and his clients have positions in CrowdStrike, Fortinet, and Palo Alto Networks. The Motley Fool has positions in and recommends CrowdStrike, Fortinet, Microsoft, and Palo Alto Networks. The Motley Fool has a disclosure policy.