Shares of Palo Alto Networks (PANW - Get Report) are flying higher in Wednesday trading, closing higher by over 8% to $254.88 per share. The stock was up even more in the first hours of the session, eclipsing the $260 mark and hitting a new 52-week high in the process.
Investors are certainly wondering if they've now missed their chance in Palo Alto Networks stock, not only given its major post-earnings jump, but also its rally from the fourth-quarter lows.
Let's take a closer look at this name given the move.
Trading Palo Alto Networks Stock
I loved the way PANW stock was bumping into its prior highs near $235 for the two sessions before earnings. It showed that buyers were ready to take this one higher on a solid report, and that's exactly what they did.
Briefly north of $260 a share, Palo Alto Networks stock was officially up a whopping $100 from its November lows. That's a 62.5% move off the bottom! Given the size of that rally in a matter of just three months, it's actually surprising we don't have more profit-taking in the name.
Part of investors' hesitance to sell is likely due in part to how well Palo Alto Networks is doing, as investors realize that while the stock is overbought in the short-term, its long-term story is still intact. The company's top- and bottom-line beat, solid outlook and $1 billion share buyback prove as much.
"We told our members that in order to push higher given the massive run we saw into earnings, we would need a monster beat. EPS over 23% above expectations and revenue guidance above estimates at the low end will do the trick, a $1 billion buyback is just icing on the cake. Bottom line, our conviction was rewarded and Palo Alto is showing why it's the industry leader."
Prior channel resistance is significantly higher from here, but prior channel support is right near this $255 level. At the moment, it's unclear whether this mark will act as support or resistance -- or whether it will play a role at all.
So what's an investor to do?
Bulls that have missed the move will want to wait for a better buying opportunity. Should PANW give up some of Wednesday's nice gains, look to see if PANW can stay above Wednesday's lows. If not, we need to give it more time to consolidate.
Traders had an excellent short-term opportunity with Etsy (ETSY - Get Report) on Wednesday morning after the stock opened lower and quickly went positive. This followed Tuesday's monster rally. Should Palo Alto Networks have a strong close today, we could see a similar strategy play out on Thursday.
At this point, watch Wednesday's range. Over the highs and PANW stock wants higher. Below the lows and it needs more time to digest the move.