On Mar 18, we issued an updated research report on Motorola Solutions, Inc. MSI.
As one of the top providers of mission-critical communication products and services, Motorola has ensured a steady revenue stream from this niche market. This communications equipment maker intends to strengthen position in the public safety domain by entering into alliances with other players in the ecosystem. It is poised to benefit from organic growth and acquisition initiatives, disciplined capital deployment, and favorable global macroeconomic environment.
Healthy Growth Dynamics
Motorola has been selected by the North West Ambulance Service (“NWAS”) NHS Trust — the second largest ambulance trust in England — to provide 450 community-first responders with its ADVISOR TPG2200 TETRA two-way pagers. The company’s new pagers are likely to upgrade mission-critical alert systems of volunteer first responders on the Airwave public safety network while improving response time during medical emergencies.
Motorola was also chosen by Springfield, OH, and Clark County, OH, to provide command center software to receive incoming 9-1-1 calls, share decisive incident information and communicate across agencies for an appropriate response. The company’s technologies, preferred by Springfield and Clark County, work in unison to disseminate information in a fast and seamless manner during an incident. It boasts an industry-leading position in integrated software, which offers the best options for efficient communications between citizens and first responders.
In addition, Motorola acquired South Carolina-based Avtec, Inc. — a provider of dispatch solutions for public safety and commercial customers. Avtec’s solutions enable business-critical communications across diverse industries. The buyout will likely expand Motorola’s public safety and commercial portfolios while allowing it to offer an end-to-end platform for customers to communicate, coordinate resources and secure their facilities.
This acquisition will also allow Motorola to target security operation centers for business-critical customers in addition to public safety command centers. Moreover, the company can sell its full product line through Avtec’s channel partners. Motorola intends to integrate its growing software suite into the Avtec console line along with its video surveillance products from the acquisition of Avigilon.
The company introduced the Si200 body-worn camera to facilitate agencies in investigation. This camera captures high-definition video and boasts additional advanced capabilities, helping integration across the public safety workflow. It combines with CommandCentral Vault — Motorola’s digital evidence management solution — enabling investigating agencies to manage content from in-field capture to judicial process under an integrated platform.
Moreover, Motorola acquired VaaS International Holdings, Inc. — a data and image analytics firm — for $445 million in a combination of cash and equity. The transaction expanded Motorola’s footprint in the command center software portfolio, with the largest shareable database of vehicle location information.
Motorola expects to witness strong demand across land mobile radio products, services and software. Furthermore, its competitive position and an attractive portfolio for large addressable markets augur well for healthy revenue growth. Driven by diligent execution of operational strategies alongside increasing market traction of coveted solution offerings, shares of Motorola have recorded average return of 18.1% compared with the industry’s rise of 3.1% over the past three months.
We remain impressed with the inherent growth potential of this Zacks Rank #2 (Buy) stock.
Other Key Picks
Some other top-ranked stocks in the industry are Harris Corp. HRS, PCTEL, Inc. PCTI and Clearfield, Inc. CLFD, each currently carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Harris has a long-term earnings growth expectation of 8%.
PCTEL currently has a forward P/E (F1) of 66.9x.
Clearfield currently has a forward P/E (F1) of 47.8x.
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