Shares of Salesforce and Cloudflare are reacting positively to new "buy" ratings
Cloud-software stocks Salesforce Inc (NYSE:CRM) and Cloudflare Inc (NYSE:NET) are getting bullish attention today.
TD Cowen upgraded Salesforce stock to "buy" from "hold" and raised its price target to $400 from $380, citing a "compelling entry point" after the stock’s 8.8% pullback over the past month. In response, CRM is up 2.2% premarket, as it looks to reclaim its Dec. 4 all-time high of $369.
Meanwhile, Cloudflare stock is up 4.2% in premarket trading, after a Citigroup upgrade to "buy" from "neutral" and price-target hike to $145 from $95. The brokerage expressed confidence in NET’s fundamentals and growth potential. Already up 49% year-over-year, the stock is on track to open near its mid-December, two-year highs.
Options traders remain bearish on both equities, but today's upgrades could inspire a sentiment shift.
NET’s Schaeffer's put/call open interest ratio (SOIR) stands at 1.39, placing it in the highest possible percentile of annual readings, signaling an extreme put bias. CRM’s SOIR stands at 0.99, which is higher than 84% of readings from the past year, further confirming bearish positioning among short-term options traders.
For those looking to take advantage, options are attractively priced. Salesforce stock’s Schaeffer's Volatility Index (SVI) of 26% ranks in the 10th percentile of its annual range, while Cloudflare stock’s SVI of 55% stands in the 21st percentile. This suggests options traders are currently pricing in lower volatility expectations.