Motorola Expects a Strong Second-Half Inflection; We Maintain our Long-Term Forecast and $195 FVE

We maintain our $195 fair value estimate for Motorola Solutions after surpassing second-quarter guidance and raising its full-year guidance. Motorola is set up for accelerating growth and margin expansion in the second half of the year, which we had been largely expecting. We see enduring strong demand for its comprehensive solution set for public safety as a testament to its narrow economic moat. Still, shares look pricey to us. We think the market is pricing in overly rosy expectations for margin expansion from Motorola’s expanding software portfolio, which we expect to come slowly and steadily. We recommend investors wait for a pullback.