Zebra Technologies Corp. ZBRA reported better-than-expected earnings Nov. 7.
The Analyst
Imperial Capital's Jeff Kessler upgraded Zebra Technologies from In-Line to Outperform and increased the price target from $95 to $120.
The Thesis
The analyst said he upgraded the stock based on his expectation that Zebra Technologies is going to successfully execute its strategy as a key applied technology infrastructure company. (See Kessler's track record here.)
Zebra is one of the purest plays on applied technology in Internet of Things, Kessler said. The company is focused on improving free cash flow profile and paying down the Motorola Enterprise acquisition debt to help improve its capital structure, he said.
Macroeconomic headwinds and a slow IT spending environment have impacted Zebra's sales cycle, but the growing importance of mobile computing and scanning solutions can become a sales and margin growth driver over the next two years, Kessler said. The price target is calculated as a 12.3 times multiple of Imperial Capital's fiscal 2018 EBITDA estimate and a 15.2 times multiple of the fiscal 2018 EPS estimate.
The Price Target
The stock is trading flat Wednesday, but has gained 27.5 percent year-to-date.
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