We have maintained our Neutral recommendation on
Motorola Solutions Inc.
), as the top line beat the Zacks Consensus Estimate but the
bottom line fell short in the recently concluded quarter.
Why Kept at Neutral?
The company is a market leader in the lucrative U.S. public
safety market and will be able to maintain its current top-line
growth in the future primarily due to the critical nature of the
public safety network in the U.S. The company has won several
lucrative contracts from various municipalities in the U.S. and
is also expanding in Australia, the Middle East and Latin
America, which will further drive the company's revenues going
Motorola Solutions also entered into an agreement with
) to install a standard-based public safety broadband network for
mission-critical operations leveraging on the nationwide LTE
network of Verizon. This solution will offer public safety
agencies real-time management and control, enhanced nationwide
roaming, while sharing the existing mobile broadband sites.
Currently, the most significant catalyst for Motorola
Solutions is the proposed installation of 4G LTE networks for
public safety in the U.S.Several industry researchers have
estimated that the market size of public safety may reach $6.5
billion in 2014.
Meanwhile, the Enterprise segment remains a near-term concern
due to macroeconomic uncertainties in Europe and unfavorable
foreign exchange movement between the U.S. dollar and the Euro.
Slowdown in the government expenditures due to budgetary
pressures, particularly at the state and local levels, may
significantly jeopardize the company's overall financials as the
company depends majorly on the government expenditures for
Moreover, Sprint's decision to phase out iDEN network is a
setback for Motorola Solutions, which is expected to impact its
top line in the current year.
Currently, Motorola Solutions Inc. has a Zacks Rank #4
Other Stocks Outlook in Related Industries
Other stocks in this sector like
Honeywell International Inc.
General Dynamics Corp.
) have all outpaced the bottom lines of the Zacks Consensus
Estimate in the recently concluded quarter.
Currently, Honeywell has a Zacks Rank #2 (Buy) while Ericsson
and General Dynamics carry a Zacks Rank #3 (Hold).
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