We have maintained our Neutral recommendation on
Motorola Solutions Inc.
), as the bottom line topped the Zacks Consensus Estimate but the
top line fell short of the same in the recently concluded
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
abroad that will further drive the company's revenue going
Motorola Solutions also entered into an agreement with Verizon
Wireless 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, enhance
nationwide roaming, while sharing existing mobile broadband
Further, the two companies also decided to work together to
enhance machine-to-machine (M2M) connections, while delivering
vertical enterprise solutions with wireless data and voice.
Several industry researchers have estimated that the market size
of Public Safety may reach $6.5 billion in 2014.
Meanwhile, Enterprise segment remains a near-term concern due
to macro-economic uncertainties in Europe. 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 is heavily dependent
on the government expenditures for its revenue. Approximately 70%
of total sales of Motorola Solutions are from the government
Moreover, Motorola Solutions is currently trading at a 52-week
high, which may be a matter of concern.
Currently, Motorola Solutions Inc. has a Zacks Rank #3
Other Stocks Outlook in Related
Other stocks in this sector like
Harris Corporation (
Honeywell International Inc.
) have all outpaced the bottom lines of the Zacks Consensus
Estimates in the recently concluded quarter.
Currently, Tellabs has a Zacks Rank #1 (Strong Buy) while
Harris and Honeywell carry a Zacks Rank #3 (Hold) for the short
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