We Think Long-Term Video Growth Outweighs Short-Term Margin Pressures for Motorola; FVE Up to $195

We’re raising our fair value estimate for narrow-moat Motorola Solutions to $195 per share, from $185, behind better long-term expectations for video and software growth. We expect Motorola to persevere through profitability pressures in the first half of 2022 and rebound nicely thereafter. Despite low first-half margin guidance, we were excited to hear management’s expectations for 20% video growth in 2022, after two years of 30% growth and now coming off a base of more than $1 billion. Growth in Motorola’s video and software businesses is a key tenet of our long-term thesis for growth and margin expansion, and we expect continued strength for both in 2022. Still, we continue to view shares as overvalued.