New Ondas Price Target After Flurry of Military Contracts

Readers may recall that, before I took leave of my post in mid- to late November, I had gotten myself invested in Ondas Holdings (ONDS) . The idea was not a Sarge original. One of you, our readers, had mentioned the stock to me in an email and I looked into it. I found it worthy of both consideration and some dough.

Looking back, I introduced the stock to subscribers on November 12, ahead of earnings. I showed readers what I saw as a falling-wedge pattern of bullish reversal. I wrote this at the time:

"What really matters is what ONDS can do as the share price makes a new approach on the 21-day EMA and 50-day SMA. Why do I think it worthy of speculation? Look at the increased trading volume since late October. Somebody big defended the stock at these levels. Should the stock make a new post November 7 low, I take my football and I go home. (That means I get out of the stock.)"

Well, the stock is up 80% from that November 7 low after having never traded lower. The stock has also taken and held both its 21-day EMA and 50-day SMA.

A Few Days Later...

On November 19, I wrote to readers after earnings had been reported. That was the last article I wrote in November. Ondas put a GAAP EPS print of -$0.03 to the tape on revenue of $10.1 million. The top-line print beat expectations by almost 30%, while the bottom-line number beat Wall Street by two cents per share.

That revenue print, by the way, though a small number, reflected year-over-year growth of 582%. The bottom-line EPS print of -$0.03 per fully diluted share, compared very nicely to last year's -$0.15. The firm also targeted full-year revenue of at least $36 million, up from previously issued guidance for at least $25 million and a country mile beyond the Wall Street consensus for $21 million. Ondas is targeting at least $110 million in revenue for next year as well. The balance sheet is in great shape as well.

News

• November 17: Ondas announced that the firm had secured a roughly $8.2 million purchase order from a major European security agency. The firm's Airobotics subsidiary is to serve as the prime contractor.
• November 20: Ondas announced a $35 million strategic investment in Performance Drone Works (PDW). PDW is a major supplier of "quadcopter" mission critical drones to the U.S. military. The two firms will collaborate on AI-enabled autonomous defense platforms for the DoD. Or is it now DoW?
• November 25: News broke that Ondas was set to acquire Robo-Team Holdings. Robo-Team is an Israeli developer of rugged tactical unmanned ground vehicles. Think swarms of autonomous mini-tanks or something along those lines. The U.S. Marine Corps is a client.

The Chart​

Take a look at that breakout from the falling-wedge that we had discussed a few weeks ago. Relative strength is quite robust without being technically overbought. ​The daily MACD is poised quite bullishly as well. The histogram of the nine-day EMA is in positive territory. The 12-day EMA has crossed above the 26-day EMA with both of those lines also above the zero-bound. These are all bullish signals. I have now made ONDS the 15th largest holding in the Sargefolio.

Target price: October high ($11.70)

Pivot: 50-day SMA (currently $7.80)

Add: Down to the Nov 21st low ($5.93)

Panic: Still the loss of the November low ($4.95)

At the time of publication, Guilfoyle was long ONDS equity.