MSI has run into some determined selling around $70, keeping the rally in check, chart above, but we can see higher lows being made on every decline and a rising On-Balance Volume (OBV line supporting a bullish case.
William O'Neil, in his newspaper and many books, has talked about a "cup and handle pattern." The chart above shows what I would consider to be a cup and handle pattern. Notice how prices saucer around with volume increasing on the right side of the pattern. The breakout point appears to be $70. The last retreat from $70 could be the "handle" with the telltale lighter volume. Prices probably should have broken out above $70 by now, but the weak overall market has probably delayed it. A strong close over $70 with equally strong volume will probably be a signal to O'Neil and others that MSI is breaking out.
This last chart, above, suggests a price target for MSI in the mid-$80s when we finally break out over $70. In true O'Neil fashion, we will suggest that you not risk more than 8% from entry.
Separately, TheStreet Ratings team rates MOTOROLA SOLUTIONS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate MOTOROLA SOLUTIONS INC (MSI) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- MOTOROLA SOLUTIONS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MOTOROLA SOLUTIONS INC swung to a loss, reporting -$3.12 versus $3.47 in the prior year. This year, the market expects an improvement in earnings ($3.36 versus -$3.12).
- Despite the weak revenue results, MSI has outperformed against the industry average of 11.9%. Since the same quarter one year prior, revenues slightly dropped by 1.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Communications Equipment industry. The net income has significantly decreased by 82.6% when compared to the same quarter one year ago, falling from $824.00 million to $143.00 million.
- Net operating cash flow has decreased to $140.00 million or 19.07% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, MOTOROLA SOLUTIONS INC has marginally lower results.
- You can view the full analysis from the report here: MSI