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Credit Suisse Expects A Strong Q2 From Alarm

AlarmCom Hldg Inc ALRM 4.15% is scheduled to report its Q2 results on August 15, after market close. The company is likely to post its results in-line with or ahead of expectations, Credit Suisse’s Michael Nemeroff said in a report. He maintained an Outperform rating on the company, with a price target of $28.

Alarm is expected to report Q2 total revenue at least in line with the Street estimate of $58.6 million, driven by SaaS and License revenue of $41.3 million. The results are likely to have been boosted by strong subscriber growth. Management is likely to raised its prior 2016 revenue guidance of $239.0-$242.5 million, Nemeroff mentioned.

Premium Justified

Nemeroff believes that Alarm’s stock warrants a premium multiple to its peers, citing the reasons as:

  • The company's differentiated product and go-to market strategy
  • The expanding market opportunity, driven by the ongoing adoption of home automation
  • Alarm’s multiyear growth initiatives continue to gain traction
  • The company has an attractive financial profile

“We believe that the investments ALRM made in 2015 to expand its market opportunity will enable the company to generate SaaS/license growth of +20% through 2017,” the analyst commented.

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