MSI - Notes from the road: Takeaways from NDR with CEO, CFO, COO and CTO

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MSI - Notes from the road: Takeaways from NDR with CEO, CFO, COO and CTO

than 2x premium to the S&P forward multiple despite our expectation for MSI to

deliver a low-risk, highly sustainable EPS CAGR in the low-double digits.

(3) Our EPS estimates are 3-6% ahead of consensus for 2027E/2028E.

Where have we gotten push back post 1Q26 results:

(1) Organic growth declined by 1% in 1Q26, though we note 1Q25 benefited from a sizable product backlog reduction (noted above)

which MSI is now lapping (with a return to more normal seasonal/qoq pressure this past quarter). On a related note, we highlight that

product orders accelerated for the fourth straight quarter in 1Q (to nearly +60% yoy), while product backlog also grew qoq.

(2) Memory and supply chain headwinds remain a headwind. While tariffs remain a yoy headwind in 1H (this and product mix weighed

on Product/SI margins in 1Q), a rise in memory costs and broader supply chain headwinds are likely to present incremental pressures

in upcoming periods, limiting MSI's ability to grow gross margins this year (in our view).

Additional notable points from 1Q results:

* Silvus strength. The Silvus acquisition continues to exceed expectations, largely driven by resilient international demand coupled with

a sales force that has doubled in size. MSI now sees a $750mn contribution from Silvus this year, with the $75mn increase vs. last quarter

driving 75% of the revenue guidance hike this quarter (remaining $25mn via core fundamental upside).

* Share buybacks continue: On buybacks, MSI repurchased ~$118mn in 1Q and noted it has bought back ~$250mn YTD, implying

active repurchases for the current quarter (as the company remains opportunistic in its capital allocation framework).

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