4 Takeaways From BMO's Meeting With Motorola Solutions Management

BMO maintained its Market Perform rating on Motorola Solutions Inc MSI following the management's reaffirmed expectations of a return to organic overall growth and Products growth in the fourth quarter, while shying away from pinning expectations too high for the third quarter.

"Management now takes a conservative approach to guidance, which we believe should help provide some stability to the stock price," analyst Tim Long wrote in a note.

The company is refocusing R&D on interoperability with existing technology as public safety LTE off to a slower-than-expected start.

"We would like to see LTE revenues pick up from the stagnant level of about $130 million/year," Long continued.

The analyst acknowledged the flexible approach of the company to selling software, a key growth driver, including overlay sales teams and benchmarking of software companies. In addition, the platform-based approach of the product and services portfolio resulted in efficient SKU and lowered costs.

On the financial side, the Long said the management maintained its capital allocation strategy of 20 percent for capex, 30 percent for dividends, and 50 percent for M&A and buybacks, though the company sees acquisitions to be on a much smaller scale than Airwave.

"We believe MSI shares are fairly valued at current levels. Although the worldwide picture is improving, growth in multiple regions remains negative and we continue to be concerned about the lack of meaningful growth from LTE," Long added.

At the time of writing, shares of Motorola Solutions were almost flat at $75.57, above Long's price target of $72.