6 Reasons To Buy Alarm.com Shares

AlarmCom Hldg Inc ALRM once again reported robust results, with the Q4 2016 revenue, EBITDA and EPS ahead of the estimates and consensus.

Imperial Capital’s Jeff Kessler upgraded the stock from In-Line to Outperform, while raising the price target from $30 to $35.

Expecting 11 percent upside potential from the current stock valuation, the analyst mentioned that Alarm.com’s “critical mass and brand now warrant a longer-term horizon.”

Q4 Beat

For Q4, the company reported revenue of approximately $70 million, growing 22 percent year-on-year, with adjusted EBITDA of $14.3 million and adjusted EPS of $0.19.

While Alarm.com ended the quarter with approximately 2.7 million subscribers, the company’s general and administrative costs rose nearly 70 percent year-on-year to $15.8 million.

Related Link: Alarm.com Closes Acquisition of Business Units from Icontrol Networks

Acquisition

“In January 2017, Alarm.com acquired substantially all of ObjectVideo, Inc’s. businesses, including the company’s products, technology portfolio, along with its personnel, for $6 million,” Kessler stated.

ObjectVideo is based in Reston, Virginia, close to Alarm.com’s headquarters, and has been a pioneer and leading provider of real-time video analytics and intelligence, object tracking, pattern recognition and identification.

ObjectVideo had sold its IP and patent licensing program in 2014 to Vancouver-based Avigilon Corp.

Benefits

“We believe Alarm.com has already accommodated for this and does not anticipate impact to capabilities in deploying analytics, including video,” the analyst went on to say.

Kessler believes that with the ObjectVideo acquisition, Alarm.com should be able to improve its in-house capabilities and help offer several new features for its service providers that could lead to increased customer “stickiness.”