JPMorgan analyst Joseph Cardoso reiterated an Overweight rating on Motorola Solutions Inc (NYSE:MSI) with a price target of $515 on Friday.
Revenue tracked to $2.53 billion (versus analyst estimate of $2.51 billion and consensus of $2.52 billion), increasing +6% (versus guide of ~$2.5 billion), led by modestly better than expected trends in LMR ($1.90 billion versus analyst estimate and consensus of $1.88 billion).
In comparison, Video Security ($441 million versus analyst estimate of $442 million and consensus of $446 million) and Command Center ($186 million versus analyst estimate and consensus of $189 million) were mainly in line to slightly softer.
Also Read: Motorola Just Launched Something That Could Change How First Responders Use AI
Meanwhile, gross margin tracked to 52.2% (versus analyst estimate of 51.2% and consensus of 50.4%), and operating margin tracked to 28.3% (versus analyst estimate of 27.3% and consensus of 27.2%), which drove an earnings beat of $3.18 (versus analyst estimate, consensus, and guide of ~$3.01)
Motorola Solutions' results tracked ahead of expectations. The company posted a solid earnings beat for the first quarter of 2025, fueled by better revenue and margin trends.
The company reiterated fiscal 2025 revenue growth of +5.5% to an implied $11.4 billion (versus analyst estimate and consensus of $11.4 billion), which includes a $40 million impact from foreign exchange headwinds. Meanwhile, gross margins guidance was comparable to 2024 gross margins of 51.5% (versus analyst estimate of 51.5% and consensus of 51.4%).
The company also anticipates operating margin expansion relative to 2024 operating margins of 29.0% (versus analyst estimate of 29.7% and consensus of 29.8%). Earnings guidance was $14.64-$14.74 (versus analyst estimate and consensus of $14.70).
The company expects second-quarter revenue growth of +4% to an implied $2.73 billion (versus analyst estimate of $2.77 billion and consensus of $2.77 billion), while earnings of $3.32-$3.37 (versus analyst estimate of $3.50 and consensus of $3.47).
While the reiterated 2025 guidance is likely to slightly disappoint investors who were earmarking Motorola as a "refuge" in the backdrop of macro uncertainty, Cardoso noted a few positives, including a revenue outlook that appears to embed some level of conservatism.
Specifically, management underscored prudence in the current backdrop despite seeing limited evidence of demand softening while also noting record first-quarter orders (ex-UK Home Office), including for Video and Command, as well as reaffirming its expectations for Product order growth in 2025 with a backlog now expected to exit the year in the ~$3.5 billion range.
Additionally, the outlook now embeds a tariff-related gross profit headwind of up to $100 million (~$0.40 on EPS), of which a majority is related to its Malaysia manufacturing footprint.
To that end, Cardoso tweaked his forecast for the puts and takes of the first-quarter 2025 results and guidance and found his estimates essentially unchanged as he continued to see Motorola well-positioned to drive earnings upsides even in the current challenging macro given resilient customer spending, solid product cycles and new introductions, improving mix, solid operating leverage, as well as the optionality provided by a robust balance sheet and cash flow generation.
MSI Price Action: Motorola Solutions stock closed Friday down 7.46% at $406.42.
Read Next:
Photo: Shutterstock
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
