Analyst Cory Carpenter of J.P. Morgan maintained a Hold rating on Alarm (ALRM – Research Report), with a price target of $62.00.
Cory Carpenter has given his Hold rating due to a combination of factors that affect Alarm.com’s current position and future prospects. Alarm.com is a leading software platform in the residential smart security market, with a significant share of U.S. homes using its services. The company has a strong business model, primarily generating revenue through recurring software fees which contribute to its stable financial performance. The resolution of a legal dispute with Vivint has removed a major uncertainty, and Carpenter expects a positive impact on the company’s financial guidance for 2024. However, the projected slowdown in SaaS/license revenue growth and the transition of ADT, one of Alarm.com’s largest customers, to its own software platform, present challenges that moderate the company’s growth outlook.
Furthermore, while Alarm.com’s diverse offerings and international expansion present growth opportunities, the competitive landscape and current valuation metrics suggest caution. With the stock trading at approximately 20 times the next twelve months’ adjusted EBITDA, Carpenter believes the valuation is fair, warranting a neutral stance. He has set a price target of $62, which reflects a modest premium to smart living peers but a discount to SaaS peers, accounting for Alarm.com’s slower expected top-line growth and its partial dependence on hardware revenue. This balanced view of growth potential against competitive and valuation concerns underpins the Hold recommendation.
In another report released on January 4, Barclays also maintained a Hold rating on the stock with a $66.00 price target.
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Alarm (ALRM) Company Description:
Alarm.com Holdings, Inc. engages in the provision of wireless and web-enabled security system technology. The company offers security, video monitoring, and energy management solutions. It operates through the Alarm.com and Other segments. The Alarm.com segment represents cloud-based platform for the connected home and related connected home solutions. The Other segment focuses on the research and development of home and commercial automation, as well as energy management products and services. The company was founded by Jean-Paul Martin and Alison J. Slavin in 2000 and is headquartered in Tysons, VA.
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