Motorola Solutions Stock Up 37%. What’s Next?
Motorola Solutions Inc. (NYSE: MSI) – one of the largest suppliers of land-mobile-radio (LMR) solutions – stock is up almost 37% since the beginning of 2024 (Feb. 18), compared to a 28% return of the S&P 500 over the same period. MSI’s peer Juniper Networks (NYSE: JNPR) stock is up 26% during the same period. So what’s happening with MSI stock?
Motorola Solutions delivered a strong performance in 2024, reporting revenue and earnings per share that surpassed consensus estimates in all four quarters. In 2024, the company’s revenue grew 8% year-over-year (y-o-y) to $10.8 billion, driven by robust growth in products and system integrations, which rose 10% fueled by demand for Land Mobile Radio Communications networks and video security products. Software and services revenue also saw a 5% y-o-y increase during this period. Furthermore, operating margins expanded to 24.9% in 2024, up 185 basis points. However, a $585 million loss from extinguishing the $1.0 billion Silver Lake Convertible Debt led to an 8% decline in net income to $1.6 billion (or 9.23 per diluted share) during the full year 2024. Also, MSI’s operating cash flow jumped $400 million y-o-y to $2.4 billion during the same period. That said, Motorola Solutions’ financial stability is underpinned by its robust cash flows, high customer retention rates, and the inherent resilience of its business model.
Image by Pete Linforth from Pixabay
MSI stock’s overall performance over the last 4-year period has been far from consistent, with annual returns being more volatile than the S&P 500. Returns for the stock were 62% in 2021, -4% in 2022, 23% in 2023, and 49% in 2024. We forecast MSI revenues to be $11.5 billion for the fiscal year 2025, up 6% y-o-y. Given the changes to our revenues and earnings forecast, we have revised our Motorola Solutions Valuation to $490 per share, based on $14.17 expected EPS and a 34.6x P/E multiple for the fiscal year 2025 – almost 15% higher than the current market price.
Motorola Solutions leverages expertise in Land Mobile Radio, Video Security, Access Control, and Command Center software. The company fuels innovation through strategic R&D investments, serving a diverse customer base across government and commercial sectors. MSI has provided guidance for Q1 2025, anticipating revenue growth of 5.0% to 5.5% and non-GAAP EPS of $2.98 to $3.03. This outlook considers expected currency exchange headwinds and a non-GAAP tax rate of approximately 21%. For the full year 2025, the company expects revenue to increase by around 5.5%. This guidance reflects Motorola Solutions’ growing confidence in its operational capabilities and strategic direction.
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