Motorola’s (NYSE:MOT) stock is quite sensitive to R&D as % of Gross Profit. Over the last week, Trefis members have created forecasts for Motorola’s R&D as % of Gross Profit and their projections suggest higher R&D expenses that could result in 5% downside to stock.
Motorola competes with Research in Motion (NASDAQ:RIMM), Apple (NASDAQ:AAPL), Nokia (NYSE:NOK), and Google (NASDAQ:GOOG) in the mobile phone market. We currently have a Trefis price estimate of around $8 for Motorola’s stock, about 12% above the current market price of around $7.
Below is the chart showing recent estimates created by Trefis members for the one driver in detail.
The average of Trefis member forecasts for R&D as % of Gross Profit indicate a decrease from around 45% in 2010 to 29% by 2016, compared to the baseline Trefis estimate of a decrease from 44% in 2010 to 28% by the end of the Trefis forecast period. The member estimates imply a downside of 5% to the Trefis price estimate for Motorola’s stock. In the past, R&D as % of Gross Profit increased from around 31% in 2005 to 47% in 2009.
Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of Motorola’s stock to R&D as % of Gross Profit.
