Morgan Keegan On Motorola Mobility Post Split

Morgan Keegan has published a research report on Motorola Mobility, Inc. (NYSE: MMI) after the company's recent split from Motorola Solutions (NYSE: MSIWI) this morning.

In the report, Morgan Keegan writes "We expect MMI to be a very volatile stock over the next few quarters and estimate a 1 million unit change in smartphone assumptions will lead to about a $0.25/share annual EPS impact, which makes predicting future earnings quite difficult. However, based on our earnings outlook, we believe 9x forward EV/EBITDA is an appropriate valuation, leading us to a $33 price target. We have attached our forecasted income statement for MMI. We expect 2011E/2012E Cash EPS of $1.43/$1.80 based on revenue growth of 27%/12%. We expect Q1:11 to be a challenging quarter for MMI due to likely share loss at its largest customer, Verizon Wireless. However, tablet launches and new flagship devices should help Motorola Mobility quickly diversify."

Morgan Keegan has initiated Motorola Mobility with an Outperform rating and $33 price target.

Motorola Mobility closed yesterday at $30.24.