Analyst: Motorola Solutions Stock a "Defensive Growth Story"

Motorola Solutions stock could benefit from an unwinding of pessimism

Deputy Editor
May 23, 2022 at 10:00 AM
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Morgan Stanley today upgraded Motorola Solutions Inc (NYSE:MSI) to "overweight" from "equal-weight," helping the shares add 2% to trade at $214.38 at last check. The brokerage firm, which carries a $240 price target for MSI, says the telecommunications concern is a "defensive growth story," whose recent pullback provides an intriguing entry point as demand for services such as video surveillance ramp up. The majority of analysts are bullish toward Motorola Solutions stock, with nine of 12 in coverage recommending a "buy" or better.

An unwinding of pessimism in the options puts could have bullish implications. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MSI's 50-day put/call volume ratio of 2.80 ranks higher than 98% of readings from the last year. In other words, puts are not only outpacing calls by more than double, they're being picked up at a much quicker-than-usual pace. 

Echoing this, the equity's Schaeffer's put/call open interest ratio (SOIR) of 2.32 sits in the 97th percentile of its 12-month range. This indicates short-term options traders are operating with a heavy put-bias.

Traders looking to enter with options could be in the right spot to make a move, as Motorola Solutions stock tends to outperform volatility expectations. This is per its Schaeffer's Volatility Scorecard (SVS) tally of 86 out of 100.

On the charts, MSI's late-December, record highs were followed by two-straight mid-February closes below the 320-day moving average -- a trendline that last put pressure on the shares in 2020. Today's pop should put the equity on the right track to reclaim the moving average. Additionally, Morgan Stanley's suggested point of entry comes as Motorola Solutions stock stands more than 20% below its 2022 breakeven mark.

 

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