RE:RBC cuts target
RBC Summary:
Investment summary
Avigilon is levered to the global growth in network video
surveillance and security solutions. Its strategy is to offer
competitive and integrated security and business intelligence
solutions at attractive price points, through closed and tightly
managed distribution channels.
Our Sector Perform rating is not a reflection of operating
performance of the business (that has been very strong), but
rather valuation and risk-adjusted return to target.
"Volatility" remains an understatement when describing
AVO share price moves over the past 18-24 months.
Quarters that miss and beat forecasts, management changes,
a negative overall shift in sentiment, and concerns about
margin sustainability and competitive pressures remain key
issues for the stock, in our view. While we believe the business
is performing well, from a stock perspective we believe the
volatility warrants investing discipline.
At 18x NTM P/E we see risk/reward getting more interesting.
However, volatile quarterly progression, and near-term
margin compression trends keep us more neutral. Maintain
Sector Perform.