Clarus analyst Peasgood initiates coverage of Avigilon with a $9 target

Clarus analyst Sean Peasgood says the opportunity for Avigilon is immense because the video surveillance market was estimated to be $16-billion in 2011 and is expected to grow to $29-billion by 2015.Vancouver’s Avigilon (TSX:AVO), which will release its Q2 numbers on August 8th, has settled into life in the public markets with style.

The company, which designs and sells high-definition surveillance products, was one of few tech IPOs to hit Bay Street last year, and has continued a sizzling pace of growth. Avigilon’s Q1 revenue was $17.8-million, up 77% over the same period a year prior.

Clarus Securities analyst Sean Peasgood thinks Avigilon will continue to beat its competition because of superior technology and its investment in sales and marketing. The Clarus analyst says that, based partly on interviews he did with integrators, he believe Avigilon can move into a leadership position in the video surveillance market over the next several years. On Wednesday, Peasgood initiated coverage of Avigilon with a BUY rating and twelve-month target of $9.

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Founded in 2004, Avigilon designs and sells next-generation surveillance systems. Management says the surveillance market is fragmented because to date there has been no integrated supplier of equipment, meaning the majority of end users do not have high definition systems due to compatibility issues and a lack of industry standards. Avigilon allows clients operating mission critical environments such as prisons and casinos to have install a high def system that is reliable as analog, and has the added benefit of providing video resolution that is standing up in courtrooms, which reduces legal costs.

Peasgood says the opportunity for Avigilon is immense because the video surveillance market was estimated to be $16-billion in 2011 and is expected to grow to $29-billion by 2015. The Clarus analyst is impressed that, after a research and development intensive period, the company is now investing heavily in sales and brand awareness. He says this move will increase operating expenses this year, but will begin to bear fruit in 2013.

Shares of Avigilon closed today down .9% to $6.41.

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