ADT Corp (ADT.N) shares could rise more than 20 percent within one year as the provider of theft-and-fire protection services expands into building automation, which could help it boost profit per share by a percentage well into double digits, Barron's said in its February 25 edition.
According to the newspaper, the Boca Raton, Florida-based company is already benefiting from a stronger housing market, rising demand for home healthcare services, and recent acquisitions, and commands 25 percent of the home alarm business and 14 percent of the small business segment.
But the newspaper said ADT hopes to boost annual revenue by 5 percent to 7 percent, roughly double the current rate, by persuading customers to buy products to help them monitor children, lock doors, control thermometers, turn lights on and off, and start dinner preparation.
ADT was spun off by Tyco International Ltd (TYC.N) in September, and its shares closed Friday at $46.98 on the New York Stock Exchange.
At the center of ADT's expansion effort is Pulse, a nearly 2-1/2 year old product that lets customers control settings remotely through devices such as smartphones and tablets.
While Pulse serves just 4 percent of ADT customers overall, the company in January said 19 percent of new customers use it.
ADT last month also set plans to quickly buy back $600 million of stock under an existing $2 billion repurchase program.
The newspaper said if ADT continues to buy back stock at a good clip, profit per share could total $1.89, which it said is 10 cents above the average analyst forecast.
It also said ADT could buy rivals, which are mainly owned by private equity firms such as Blackstone Group LP (BX.N), or be a target for deep-pocketed acquirers such as AT&T Inc (T.N).
Based on recent transactions for security companies, ADT could fetch $59 per share in takeover, the newspaper said.
(Reporting by Jonathan Stempel in New York; Editing by Bernard Orr)