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Motorola to Boost Israel Railways' Operational Efficiency

Zacks Equity Research

Motorola Solutions, Inc. MSI has secured a tender to provide The Israel Railways Company with an advanced push-to-talk over cellular (POC) communication solution, which will enhance operational efficiency and passenger safety. The company’s leading position alongside attractive portfolio for large addressable market augurs well for future growth. Following the news, Motorola’s share price slipped 0.86% in yesterday’s trading hours to eventually close at $164.19.

Per the deal, the communications equipment maker will supply, install, operate and maintain the POC-based wireless communications system for Israel Railways for three years, with an optional extended period of five years. Hot Mobile will be the mobile network carrier for this project. Notably, the solution will replace the railway company’s prior communication service, Mirs, which was based on Integrated Digital Enhanced Network technology.

In this context, Motorola expects to witness strong demand across land mobile radio products, services and software. These systems tend to drive demand for additional device sales, and promote software upgrades and infrastructure expansion. The comprehensive suite of services ensures continuity and reduces risks related to critical communications operations.

The company aims to deliver up to 3,000 devices powered with WAVE — Motorola’s work group communication service — to enable operational communication across the railway’s lines, offices, and maintenance and logistical departments. WAVE will likely allow the railway company to benefit from an array of key features and services for smooth day-to-day operations.

Motorola has long-term earnings growth expectation of 7.7%. Buoyed by increasing market traction of the company’s cutting-edge solution offerings, the stock has rallied 42.3% compared with the industry’s rise of 16.9% in the past year.

As a leading provider of mission-critical communication products and services worldwide, Motorola has ensured a steady revenue source from this niche market. The company intends to bolster its position in the public safety domain by working together 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.

Motorola currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the industry include Comtech Telecommunications Corp. CMTL, Ubiquiti Networks, Inc. UBNT and PCTEL, Inc. PCTI, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Comtech has long-term earnings growth expectation of 5%.

Ubiquiti has long-term earnings growth expectation of 19.8%.

PCTEL surpassed earnings estimates twice in the trailing four quarters, with an average positive surprise of 100%.

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