Cybersecurity software major Palo Alto Networks (PANW) continues to trade near its all-time high, the latest in a long string. And in a welcome move, on Monday the IBD Relative Strength Rating for the software company climbed to 72, up from 68.

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The upgraded 72 Relative Strength Rating shows that Palo Alto Networks stock beat 72% of all stocks on price performance this past year. Market research shows that the market’s biggest winners often have an 80 or better RS Rating as they launch their biggest runs. See if Palo Alto Networks can continue to rebound and clear that threshold.

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Software in general has been a soft spot in the market, Evercore ISI analysts say.

“While the AI nervousness seems a bit overdone when thinking long-term, the tactical reality is underperformance creates apathy and right now it’s easy to ignore the space,” Evercore analyst Kirk Materne said in a report Monday. The one bright spot in the software sector is cybersecurity, analysts say.

Palo Alto Networks Stock Eyes Fresh High

Meanwhile, Santa Clara, Calif.-based Palo Alto Networks is trying to complete a consolidation with a 380.84 entry. Viewing it on a weekly or monthly chart shows Palo Alto Networks stock has risen sharply, in hockey stick fashion, for a long time.

Palo Alto Networks stock is up more than 1,400% from its post-IPO close at 19.05 in July 2012. More recently, it shot up more than 500% from its Covid crash low 47.84 in late 2020. The company says on its website that it uses “Precision AI” in its software to protect companies and individuals.

It hit an all-time high at 380.84 on Feb. 9 and then consolidated. It dropped as low as 265 on April 4 before turning up again as it formed a flat base. Monday afternoon the software maker traded at about 293, down fractionally for the day.

However, be aware that it’s a third-stage base. Later-stage patterns can work, but have a higher failure rate than first and second stage bases since, by that point, the stock has already risen significantly.

Among its other key ratings the software maker has a terrific 97 Earnings Per Share Rating out of 99, and an 88 Composite Rating. Its best possible A SMR Rating (sales + profit margins + return on equity) shows strength in its fundamentals. And its C Accumulation/Distribution Rating shows about as many funds are buying its stock as selling.

Profit Growth Strong, But Down From Earlier

Palo Alto Networks reported 20% earnings growth in its most recent report to $1.32 per share. Revenue increased 15% $1.98 billion. Although still strong, it was the weakest EPS growth rate in a year after growing 80%, 66% and 39% the prior three quarters. Look for a return to rising EPS growth for this quarter.

Palo Alto Networks earns the No. 5 rank among its peers in the 34-stock Computer Software-Security industry group. CrowdStrike (CRWD) is the top-ranked stock in the group.

The exclusive Relative Strength Rating from Investor’s Business Daily identifies price performance with a 1 (worst) to 99 (best) score. The score shows how a stock’s price movement over the trailing 52 weeks compares to all the other stocks in our database.

Please follow James DeTar on X, formerly known as Twitter, @JimDeTar 

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