Friday, January 28, 2011

Motorola Mobility (NYSE:MMI) Still Strong Google (NASDAQ:GOOG) Android Player

Even though their latest quarter wasn't impressive, Motorola Mobility (NYSE:MMI) is still a strong player in Google's (NASDAQ:GOOG), and Gleacher recommends aggressiveness with MMI is in the low 30s, which they are now.

Gleacher says, "We would be aggressive buyers in the low-$30s. We see MMI as a leading Android player focused on high-performance hardware that should achieve scale in CY12. Our $40 target is based on $19 for handsets (0.6x CY12 sales) plus $9 for Home (13x CY12 earnings) and $11.79 in net cash. We expect the stock to appreciate as visibility of margins improves in 2H11...We look for CEO Sanjay Jha to continue spending at a modulated rate to grow share while showing improved margins. We see Europe as the next market to adopt Android and look to MMI to 'spend into' that opportunity in 2011. We believe MMI can ultimately scale handset margins to 8% or higher, which would equate to $2.40+ in EPS power."

Gleacher & Co. reiterates a "Buy" rating on Motorola Mobility Holdings (MMI), which closed Thursday at $30.51, dropping $4.32, or 12.40 percent. Gleacher has a price target on MMI of $40.

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