) to strong buy from outperform.
Analyst Alkesh Shah says the company is clearly committed to improving its cash flow and managing its working capital during the current downturn. While he does not see a near-term catalyst for shares, he believes they are approaching floor value.
Shah says recent layoffs, outsourcing agreements and capital expentidure cuts position Motorola's EPS for rapid acceleration when current conditions start to improve. He says Motorola's discounted cash flow valuation model and the price-earnings to growth ratio model validates fair value in the $20s, and the sum-of-parts puts fair value in $30s. He would be an aggressive buyer at current levels with a $24 target.