Deutsche Bank Makes A Bull Call On Motorola Solutions

Motorola Solutions Inc MSI is trading up after being upgraded by Deutsche Bank and named as the firm's large-cap value idea. 

The Analyst

Deutsche Bank analyst Vijay Bhagavath upgraded shares of Motorola Solutions from Hold to Buy and increased the price target from $86 to $110, suggesting roughly 18-percent upside from current levels.

The upward adjustment to the price target reflect Deutsche Bank's updated 2018-2020 revenue and earnings estimates, which are ahead of consensus expectations.

Bhagavath also named Motorola as his large-cap value idea. (See the analyst's track record here.) 

The Thesis

Motorola's software command center solutions business is likely to grow by 25 percent on a CAGR basis, Bhagavath said in a Thursday note. This is a core driver for improving margins and positive earnings "surprises" during 2018, 2019 and beyond, he said.

Motorola is incorporating a higher percentage of software features in its core devices and systems portfolio over the near- to mid-term, which the analyst said is another key catalyst for potential earnings per share upside.

Deutsche Bank's fresh view of the company suggests improving order trends for its radios and systems in 2018 and beyond at state, local and federal agencies in the U.S., Bhagavath said.

Motorola's near-term catalysts are the following, the analyst said: 

• Refresh opportunities for the company's public safety portfolio.
• New orders for major world events such as the Winter Olympics and World Cup.
• A setup for better-than-expected public safety IT budgets in the new federal fiscal year. 

The Price Action

Shares of Motorola Solutions are up about 15 percent over the past year.

At the time of publication, shares were up 3.04 percent at $96.38.  

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