BMO Capital Raises Motorola Solutions (MSI) to 'Outperform' Ahead of Catalysts
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(Updated - October 12, 2016 8:38 AM EDT)
BMO Capital upgraded Motorola Solutions Inc. (NYSE: MSI) from Market Perform to Outperform with a price target of $84.00. Analyst Tim Long sees catalysts from the return of organic revenue growth, smart public safety software expansion, and growth in public safety LTE.
"We expect organic revenue growth to return later this year, investment in smart public safety software to help expansion beyond hardware, and growth in public safety LTE after a FirstNet contract announcement," said Long.
The analyst continued, "After several years of tough headwinds, organic revenue growth is set to return by 4Q16. Combined with the AirWave acquisition and management's diligently taking expenses out of the business, this should drive continued double-digit growth at the bottom line."
Discussing smart public safety software expansion, the analyst said, "Management sees an opportunity beyond traditional equipment sales and is investing in smart public safety software opportunities, such as computer-aided dispatch and records management. Motorola Solutions is buying a small firm to beef up its offering in this area, and management has been changing sales incentives to help with the transition from hardware sales."
On public safety LTE catalysts, Long added, "Although Motorola Solutions' growth in public safety LTE was slowed by government regulation, we believe the pending FirstNet decision, expected in November, will open opportunities for growth. Even if the company doesn’t win the primary contract, we believe its investment in LTE-LMR interoperability will lead to sales opportunities for services and hardware."
Shares of Motorola Solutions Inc. closed at $73.50 yesterday.
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