In a politically divisive environment, about the one thing that Americans can agree on is that the men and women who protect our communities deserve the equipment and assets necessary to do their job. That’s where security specialist Axon Enterprise (NASDAQ:AXON) enters the frame. By offering a wide range of utilitarian products, Axon is effectively politically agnostic. In other words, AXON stock can thrive no matter who wins this November.
Naturally, a Republican victory led by former President Donald Trump should provide a robust catalyst for Axon. Known for its non-lethal weapons and safety equipment – in particular police body cameras – demand for such products should soar under a second Trump term. For years, the former real estate mogul and reality television star has cultivated a law-and-order persona. As a result, AXON stock may enjoy downwind benefits under his leadership.
However, even if Vice President Kamala Harris and the Democrats win big come November, AXON stock may still thrive due to the law enforcement oversight provided by body cameras.
Options Traders Bet Heavily on Axon Enterprise
Another factor that supports the bullish case of AXON stock is the underlying options market. Specifically, Tuesday’s options flow data – which focuses exclusively on big block transactions likely placed by institutional or professional investors – shows that net trade sentiment stands at $274,000 in favor of the optimists.
Interestingly, most of the bullish individual transactions represent sold (or written) puts expiring on Aug. 16, 2024, with strike prices ranging from $280 to $300. While there were even lower strike prices, this range was the most common, implying that the smart money doesn’t anticipate AXON stock dropping below $280 in the near term.
As for more directly positive trades, some investors acquired contracts of the 2025 Jan. 17 $400 call. Coincidentally, TipRanks notes that the most optimistic analyst price target – from Needham’s Joshua Reilly – stands at $400.
Contributing to the enthusiasm is Axon’s strong results for the second quarter. The company posted earnings per share of $1.20, easily beating out the consensus view of $1.02. On the top line, the security specialist generated sales of $504.1 million. This figure too beat the consensus target, set at $477.96 million.
Trade of the Day: Buy AXON Stock
For the Trade of the Day, conservative investors may simply want to acquire AXON stock in the open market. Right now, Wall Street analysts have a unanimous rating of strong buy on the equity. Further, the average price target stands at $377.38, implying almost 28% upside from Tuesday’s close.
More adventurous investors may consider the 2024 Sept. 20 $330 call. Although the bid-ask spread on this option is sky high (as are the other transactions within the option chain), it features relatively high volume and open interest.
Further, the fundamental and technical momentum of AXON stock should see it challenge upside resistance at $320 soon. Should the bulls break above this level, $330 should be within easy reach.
The immediate risk factor is that the 50-day moving average ($295) and the 20-day exponential moving average ($301.38) may hassle the optimists. However, based on the options flow data, a floor should be penciled in at the $300 level.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
