Motorola has ‘unique balance of growth/profitability’, Deutsche starts at Buy

Deutsche Bank analysts initiated research coverage of Motorola Solutions (NYSE:) stock on Friday with a Buy rating and a 12-month price target of $350.

The bullish thesis is based on three key points, one of them being “strength and resilience of end market spend dedicated to safety,” analysts wrote in the note.

“Motorola Solutions’ unique exposure to both Public (~75% of sales) and Enterprise Safety (~25% of sales) spending are a key differentiator, in our view,” they added.

This sets it apart from many Networking/Communications peers, which may face potential cyclical challenges linked to trends in Enterprise/SMB/Service Provider markets in 2024E.

Beyond the obvious, the analysts foresee an enduring emphasis on safety and security as a prominent theme, anticipating additional revenue boosts from government stimulus programs such as ARPA and the American Rescue Plan over time.

Other two key points underpinning Deutsche’s views include “steady growth in the core LMR (land mobile radio) segment” and “double-digit growth in both non-GAAP EPS and FCF/share.”

The aforementioned revenue growth is expected to be further bolstered by margin expansion, stock buybacks, and healthy FCF generation, the team said.

Meanwhile, key risks that may weigh on Motorola’s prospects are “slowing revenue growth, softer macro driving weaker orders/more material backlog reduction, constraints on government spending due to excess debt or limited tax receipts, [and] competition,” Deutsche analysts noted.