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Motorola Wins U.S. Navy Deal to Augment Radio Communications

Zacks Equity Research

Motorola Solutions, Inc. MSI has secured a $23.8 million contract from the U.S. Department of Defense to bolster mission-critical communications infrastructure among the first-responder community in the U.S. Navy. The deal is likely to augment the communications equipment maker’s competitive position in the public safety ecosystem. Motorola’s share price rose 0.11% in Tuesday’s trading session to close at $161.14.

The project encompasses four options and is expected to be completed by December 2020. If all the options are applied, then the agreement will be functional through 2023, raising the project valuation to $93.6 million.

Per the contract, Motorola will be undertaking necessary steps for sustaining Naval Facilities Engineering Command Anti-Terrorism/Force Protection Ashore mobile radio systems globally. The agreement involves state-of-the-art software upgrades and licenses, asset and configuration management, and benchmark testing.

Showcasing its adaptability in both military and first responder markets, the Chicago-based company will leverage its much-acclaimed P25 trunked network to strengthen the deployment of Land Mobile Radio (LMR) communication for easier access, enhanced coverage and stronger security in the Navy. Specifically designed for maintaining a synchronized communication between public safety agencies and the Navy’s first responder services, the LMR network is aimed at providing assistance during emergencies like accidents, terrorist attacks, or natural calamities.

As one of the leading providers of mission-critical communication products and services, Motorola generates steady revenues from this niche market. The company intends to fortify its position in the public safety domain by entering into alliances with other players in the ecosystem. It remains poised to benefit from organic growth and acquisition initiatives, disciplined capital deployment and favorable global macroeconomic environment.

Moving forward, the company expects to witness strong demand across LMR products and software. These systems 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. Its competitive position and an attractive portfolio for large addressable market augur well.

Motorola has a long-term earnings growth expectation of 8.5%. Driven by robust demand across its mission-critical communications platform, the stock has rallied 45.5% compared with industry’s growth of 27.8% in the past year.

Motorola currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the industry are Qualcomm Incorporated QCOM, Ubiquiti Inc. UI 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.

Qualcomm surpassed estimates in each of the trailing four quarters, the average positive earnings surprise being 8.7%.

Ubiquiti outpaced estimates thrice in the preceding four quarters, the average positive earnings surprise being 16.1%.

PCTEL exceeded estimates in each of the trailing four quarters, the average positive earnings surprise being 150.6%.

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