Motorola May Dip From Higher R&D Costs

Motorola shares could dip 5% from higher R&D costs.
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Motorola

's

(MOT)

stock is quite sensitive to R&D as % of gross profit.

Over the past 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

(RIMM)

,

Apple

(AAPL) - Get Report

,

Nokia

(NOK) - Get Report

, and

Google

(GOOG) - Get Report

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 5% downside 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.

Our complete analysis for Motorola's stock is

here

.

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