Motorola Solutions Re-Rating Closes Valuation Opportunity - Morgan Stanley

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By Sam Boughedda

Motorola Solutions (NYSE:MSI) shares were downgraded from Overweight to Equal-Weight, but the price target was raised to $260 from $240 by a Morgan Stanley analyst on Wednesday.

The analyst said in a note to clients that the recent re-rating in Motorola closes the valuation opportunity faster than they anticipated.

Motorola Solutions shares are down over 2% Wednesday.

"At an expanded premium (~20% vs. the S&P 500), we think defensibility and expectation of upward earnings trajectory is largely built in. We remain positively inclined on MSI and see a path towards our $310 bull case valuation on a longer term view, but we also acknowledge risk as premium valuation reflects elevated expectations with little room for maturity in the current LMR cycle," explained the analyst.

"Along with our downgrade to EW (from OW), we roll forward our PT multiple to our FY24 estimates (PT moves to $260 from $240). We could be proven too conservative with better than expected realization of pricing actions into the 2H, FX headwinds turning positive in FY23, or with continued mid-to-high single digit growth in LMR over the next couple of years," he added.