New Price Target for Ondas Holdings After $10 Million Move

Earlier on Monday morning, I covered a few names that I thought would be wartime winners. I largely stuck to the large defense contractors and oil services names. I did not touch on the drone makers used by the department of defense/war. 

Kratos Defense (KTOS)  is up 9% on Monday morning, while AeroVironment (AVAV)  is up a stunning 18%. A smaller military drone provider, Ondas Holdings  (ONDS)  is both a "Stocks Under $10" name and Sarge-folio holding. ONDS is hopping as well, up a rough 20% on Monday morning as I work on this piece.

Ondas announced a $10 million investment in World View Enterprises on Monday morning. The companies also announced they have entered into a partnership that outlines a collaborative framework for the development of multi-domain and multi-modal intelligence, surveillance and reconnaissance solutions for both commercial and defense-related clientele. 

The two companies plan to evaluate joint solution architectures, and priority mission applications serving the U.S. Department of War, Department of Homeland Security, and counterpart agencies of allied nations. That, however, is not why ONDS is on the rise. The stock is up with its group.

Remember

Ondas is set to report in two weeks, ahead of the opening bell on Monday, March 16. Wall Street is looking for an adjusted -$0.03 per share on revenue of $27.5 million. Of the eight sell-side analysts I know who cover the name, there is no real consensus.

Two analysts have revised their numbers higher since the start of the period, while two have revised their estimates lower. Four have done nothing. That revenue print would compare to just $41.1 million for the year-ago period.

The Chart...​

Readers will see that the developing head-and-shoulders pattern of bearish reversal that I had drawn up for you a few weeks back more or less blew over the past two weeks. ​On Monday morning, the stock took back both its 21-day EMA and 50-day SMA. 

Relative strength has pulled upward from a neutral reading. Within the daily MACD, the 12-day EMA has crossed above the 26-day EMA while the histogram of the nine-day EMA has solidified its place above the zero-bound. These are all somewhat bullish developments. 

Now, let's get rid of that head and shoulders:

​Replace that pattern with ​a pitchfork model and we see that support has aligned with the lower trendline. That would put our current pivot at the central trendline or, for now, roughly $14. I will now adjust my outlook ahead of earnings:

Ondas Inc (ONDS)

Target Price: $17 (up from $13.50)

Pivot: $14

Add: down to recent low ($8.32)

Panic: Loss of 200-day SMA

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