ADT's (ADT) simplified business model, focusing on smart home security, positions the company to boost revenue, earnings before interest, taxes, depreciation, and amortization margins, and free cash flow, RBC Capital Markets said in a note on Tuesday.

The analysts said growing installation revenues, continued progress with strategic initiatives like Trusted Neighbor, the ADT+ platform, partnerships with Google (GOOG, GOOGL) and State Farm, and better direct sales and customer retention rates, will help drive revenue growth, despite slower monitoring revenue. EBITDA margins should improve due to cost control, reduced service costs through ADT+ and virtual call solutions, and the introduction of Google's Cloud Contact Center Artificial Intelligence platform in 2025.

The analysts said for the full year 2025, they are projecting revenues of $5.048 billion, which is close to the consensus of $5.045 billion, and expect adjusted EBITDA of $2.71 billion, with a 53.7% margin, slightly below the consensus of $2.72 billion and a 53.9% margin. However, there is potential for margin improvement as ADT transitions to a customer-owned equipment model, they added.

For Q4, the analysts are forecasting revenue of $1.231 billion, slightly below the consensus of $1.236 billion, and expect adjusted EBITDA of $671 million, with a 54.6% margin, above the consensus of $663 million and a 53.6% margin. They project an adjusted EPS of $0.20, compared to the consensus of $0.19.

RBC has a sector perform rating and a $9 price target on ADT.

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