Sell-Side Scans Zebra Technologies' Stellar Q4

Zebra Technologies Corp. ZBRA announced fourth-quarter results Thursday, reporting better-than-expected non-GAAP earnings per share and 9-percent revenue growth. The company's first-quarter, non-GAAP earnings per share guidance was notably above estimates.

The Analysts

Barrington Research's Matthew Gall reiterated an Outperform rating on the shares and increased the price target to $150.

Tigress Financial's Ivan Feinseth said the shares are likely to continue to trade higher, although he said he would be a buyer on pullbacks into the $120-$125 range.

Market Leadership, Portfolio Provide Positive Long-Term Prospects

Zebra Technologies' market leadership position and portfolio breadth provide positive long-term prospects, Barrington's Gall said in a Friday note. The analyst noted the migration of 12-15 million mobile devices to new operating systems.

Zebra lowered product costs, reduced operating expenses and accelerated organic sales performance, Gall said.

Among the segments, Gall said the enterprise visibility and mobility segment reported 8.5-percent organic net sales growth, excluding WLAN divestiture and forex translation. The asset intelligence and tracking segment reported 5-percent organic sales growth, helped by growth in printing and supplies, Gall said. 

The Q4 margin was at the highest levels since the Enterprise acquisition.

The fiscal 2017 results ended on a positive note, with the above-consensus guidance suggesting continuation of the trend into 2018, the analyst said.

Citing an improved margin profile and a tax rate reduction, Barrington increased its adjusted earnings per share estimate for 2018 from $7.77 to $9.35 while indicating that its 2019 estimate is under review.

Strong Demand Across All Product Lines, Industry Verticals

The Q4 print is the result of strong demand across all product categories and ongoing debt reduction, Tigress Financial's Feinseth said in a note. Zebra benefited from increasing demand for RFID scanners and barcode readers, helped by the increasing reliance of supply chain management on technologies to manage and track assets and products, he said. 

"Zebra continues to experience strong demand across all product lines and all industry verticals, especially in health care and retail, where potential growth continues to be the strongest." 

The Price Action

Along with the post-earnings run-up, Zebra Technologies shares are up about 63 percent over the past year.

Zebra shares were up 4.92 percent at $141.90 at the close Friday. 

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Posted In: Barrington ResearchFeinsethMatthew GallTigress FinancialAnalyst ColorPrice TargetReiterationAnalyst Ratings

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