BofA Global Research double upgraded NET to "buy" from "outperform"
Cloudflare Inc (NYSE:NET) stock is up 5.9% before the bell, after BofA Global Research issued a rare double upgrade to "buy" from "underperform." The firm also boosted its price target to $160 from $60. The analyst cited strengthening fundamentals, including Cloudflare’s expanding role in network security, and several catalysts that could accelerate top-line growth.
Coming into today, 18 of the 30 brokerages covering NET carried a “hold” or worse rating, despite the stock's 28.3% year-over-year lead. This suggests there is room for more upgrades.
Options activity suggests caution remains among traders. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NET’s 50-day put/call volume ratio sits at 1.11, ranking in the 97th percentile of annual readings. This elevated ratio reflects a bearish skew, potentially setting the stage for a sentiment reversal.
From a volatility perspective, now may be an opportune time to trade NET options. Its Schaeffer's Volatility Index (SVI) of 46% sits in the 17th percentile of its 12-month range, suggesting relatively low option premiums -- favorable for buyers initiating long volatility strategies.
Cloudflare stock is attempting to break out from a near-term downtrend, after it slipped 18.5% in the last month and pulled back from its Feb. 14 record high of $177.37. Shares could today topple the 20-day moving average following a bounce off familiar support at the $110 level.