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We have maintained our Neutral recommendation on Motorola Solutions Inc. (MSI - Analyst Report), as the bottom line topped the Zacks Consensus Estimate but the top line fell short of the same in the recently concluded quarter.

Why Kept at Neutral?

The company is a market leader in the lucrative U.S. Public Safety market and will be able to maintain its current top-line growth in the future primarily due to the critical nature of the public safety network in the U.S. The company has won several lucrative contracts from various municipalities in the U.S. and abroad that will further drive the company’s revenue going forward.

Motorola Solutions also entered into an agreement with Verizon Wireless to install a standard-based public safety broadband network for mission-critical operations leveraging on the nationwide LTE network of Verizon. This solution will offer public safety agencies real-time management and control, enhance nationwide roaming, while sharing existing mobile broadband sites.

Further, the two companies also decided to work together to enhance machine-to-machine (M2M) connections, while delivering vertical enterprise solutions with wireless data and voice. Several industry researchers have estimated that the market size of Public Safety may reach $6.5 billion in 2014.

Meanwhile, Enterprise segment remains a near-term concern due to macro-economic uncertainties in Europe. Slowdown in the government expenditures due to budgetary pressures, particularly at the state and local levels, may significantly jeopardize the company’s overall financials as the company is heavily dependent on the government expenditures for its revenue. Approximately 70% of total sales of Motorola Solutions are from the government agencies.

Moreover, Motorola Solutions is currently trading at a 52-week high, which may be a matter of concern.

Currently, Motorola Solutions Inc. has a Zacks Rank #3 (Hold).

Other Stocks Outlook in Related Industries                

Other stocks in this sector like Harris Corporation (HRS - Analyst Report), Tellabs Inc. and Honeywell International Inc. (HON - Analyst Report) have all outpaced the bottom lines of the Zacks Consensus Estimates in the recently concluded quarter.

Currently, Tellabs has a Zacks Rank #1 (Strong Buy) while Harris and Honeywell carry a Zacks Rank #3 (Hold) for the short term.

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