Bull Signal Flashing For Website-Security Giant
Website-security concern Cloudflare (NET) has been on a rapid climb on the charts since bottoming out at $15.05 during the broader market’s mid-March crash. In fact, in early August the equity surged to an all-time high of $45.28. And although year-to-date NET sports an impressive 126% gain, the stock has pulled back, making now the perfect time to bet on Cloudflare stock’s next leg higher.
According to data from Schaeffer’s Senior Quantitative Analyst Rocky White, NET has come within one standard deviation of its 40-day moving average four times in the past three years. One month later, the equity was higher 100% of the time, averaging a gain of 22.07%. Another surge of this magnitude from the security’s current perch of $38.09 would send the stock to a fresh all-time high above the $46 mark.
Analysts are heavily bullish on Cloudflare stock as well, with 11 of the 14 in coverage sporting a “buy” or better rating. Meanwhile, the 12-month consensus price target of $46.33 is a healthy 22.1% premium to the equity’s current level.
Also of importance, options are looking attractive on NET at the moment. This is per the security’s Schaeffer’s Volatility Index (SVI) of 64%, which stands higher than just 16% of all other readings during the past 12 months. Simply put, options players are pricing in relatively low volatility expectations at the moment.
Lastly, shorts have been exiting the building in droves. Specifically, short interest fell 14.6% in the last two reporting periods, and the 8.27 million shares sold short make up 5.7% of Cloudflare stock’s available float. In other words, it would take nearly a day and a half at the security’s average pace of trading to buy back these bearish bets. Should short sellers continue their exodus, it could provide additional tailwinds for NET.