Digital Ally Initiated At Rodman & Renshaw; Favorable Regulatory And Commercial Environments Noted

In a report published Thursday, Rodman & Renshaw analyst Amit Dayal initiated coverage of Digital Ally, Inc. (NASDAQ: DGLY) with a Buy rating and $24 price target. The company has been able to achieve an industry leading position through its consistent innovations.

The spend on security system has been consistently increasing across the world over the past decade, and the analyst expects this trend to hold true for all sectors, including private, commercial, military and law enforcement. The global smart surveillance and video analytics market is expected to see significant growth at a CAGR of 14 percent through 2020.

"We believe DGLY is one of the best-positioned players to offer police departments a combined offering of in-car surveillance systems and body worn cameras. We believe the market is already shifting in this direction. DGLY's VuLink system is ideally suited for this, and we expect police departments to opt for solutions that minimize dealings with multiple providers," Dayal stated.

In addition, the company's video recording offerings have rapidly been gaining traction in the commercial space, with Digital Ally being the leading provider in the ambulance market. The analyst expects to company to report revenues from the commercial sector that meet or even exceed those from the law enforcement domain within the coming two years.

The regulatory environment is also favorable for the company, with the White House proposing a $263 million program last fall to take of improvements for law enforcement agencies.

"The proposed three-year funding plan includes $75M for a Body Worn Cameras Partnership, which would help states purchase these systems. Investors should note that the funding would need to be matched by state and local police and could allow the purchase of approximately 50,000 body cameras," the Rodman & Renshaw report said.

In addition, the analyst believes that Digital Ally is back to delivering revenue growth, with an estimated growth of 47.7 percent and 35.4 percent in 2015 and 2016, respectively.

"Demand from the law enforcement segment, expansion into commercial markets and order flow from international customers should drive this growth," Dayal added.