Motorola (MOT) shares are getting a boost from Bank of America/Merrill Lynch analyst Tai Liani, who Tuesday morning raised his rating on the stock to Buy from Neutral, setting a price target of $9, up from $7.
He cites four reasons for the upgrade, most of which boil down to a belief that the company is on the verge of staging a turnaround in its troubled handset business:
- There are new handsets coming in Q4, including smart phones based on the Google (GOOG) Android operating system.
- The stock’s revenue multiple should improve as the handset portfolio shows progress. He is modeling a rebound to 8% handset market share in 2010, from 6% now, which would take the company back to 2008 levels.
- Aggressive cost controls should exceed the company’s target of $1.7 billion for this year. He expects drastic cuts in wireless infrastructure R&D spending.
- He also notes that the company’s non-handset businesses are slow growth but very profitable, and account for 60% of total sales.
MOT Tuesday is up 22 cents, or 3.7%, to $6.25.