Credit Suisse Raises Price Target on Alarm.com Holdings, Inc. (ALRM) as Hardware Drives 2Q Beat
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Credit Suisse reiterated an Outperform rating on Alarm.com Holdings, Inc. (NASDAQ: ALRM), and raised the price target to $35.00 (from $28.00), following the company's 2Q earnings report. ALRM reported results all above estimates, with Hardware revenue driving the company's top line beat.
Analyst Michael Nemeroff commented, "ALRM posted strong Q2 results, in our view, with revenue, adj. EBITDA, and EPS all above expectations. Hardware revenue (+25.8% yr/yr vs. CS of down -5.0%) drove the majority of the revenue outperformance (again) as ALRM saw broad-based strength across its product lines, particularly camera and doorbell video equipment (+86% yr/yr). SaaS/license revenue of $42.0M (+23.1%) was also modestly ahead of our est. of $41.3M (+21.1%) due to further service provider penetration as well as increased contribution from ALRM's non-security segments (HVAC, energy, and remote access management). Mgmt once again raised its full-year SaaS/license revenue guide by more than the Q2 beat, which we find encouraging given its high visibility/recurring nature (93% renewal rate) and the increased SaaS/License GM leverage (+120bps yr/yr) from improved economies of scale. ALRM shares are currently trading at ~5.2x 2017E EV/Sales, but the multiple is modestly more reasonable (~5.0x) pro-forma ~$40M of annual revenue (CS est.) from the two Icontrol business units, which could prove to be conservative. Further, given the significant strategic implications from the pending acquisition of Connect along with numerous growth initiatives in the pipeline (e.g., international opportunity, new verticals, IoT secular trends, SEM module, and the new Insights Engine), we continue to believe that ALRM is well-positioned to generate SaaS/license revenue CAGR of >+20% through 2017. Outperform."
Shares of Alarm.com closed at $32.93 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst EPS View, Analyst PT Change
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