Motorola Earnings: Gross Margin Strength Surprises Us Again

We are increasing our fair value estimate for wide-moat-rated Motorola to $351 per share from $320 as the company reported another excellent quarter. We view shares as slightly overvalued. However, if Motorola executes flawlessly on items such as its solid margin expansion and strategically sound acquisitions, there could be more upside to our fair value. Given strong results and the updated outlook, we are slightly increasing our growth and margin expectations. Our 2024 and 2025 earnings per share projections increased 2% and 5%, respectively, while our longer-term growth assumptions also increased. The continued growth of land mobile radio products and the gross margin strength, in particular, surprised us to the upside, as a shift toward feature-rich LMR products and improving scale and supply dynamics continue to play out.