Zebra Technologies Corporation

Zebra Technologies had a strong finish to the year, with profitability and sales near the high end of the outlook of the company and an all-around beat in the fourth quarter. There was a growth in sales volume in North America, and softer sales were seen in the EMEA region. Latin America sales increased with strong growth in Mexico and Brazil. From the solution-offering perspective, RFID, tablets, data capture, and printing were bright spots. Sales of mobile computing declined mainly because of challenging prior-year comparisons, especially in EMEA. Demand remained solid, with strength in midsize and small orders. The order pipeline remains healthy. However, due to an uncertain microenvironment, Zebra Technologies continue to see elongated sales cycles and softening of demand. From the profitability perspective, Zebra Technologies increased EPS and expanded EBITDA margin by controlling operating expenses. In the year, around $880 million was invested in the acquisition of Matrox Imaging to expand the company’s machine vision solutions offering. We give Zebra Technologies an ‘Outperform’ rating with a revised target price.