ADT's (ADT) solid Q1 free cash flow growth on higher upfront installation revenue instills confidence in achieving over 20% FCF growth in 2026, RBC Capital Markets said in a research report emailed Friday.

The ADT+ Platform, combined with the Origin AI acquisition, bolsters competitive positioning and provides differentiated value supporting pricing power, while service excellence enhances client experience and drives operational cost efficiencies, positioning the company for growth and margin expansion, analysts wrote.

The company is also implementing artificial intelligence for churn propensity modeling and lead qualification, with outbound sales primarily handled by AI. The AI-driven churn propensity modeling will facilitate the identification and retention of at-risk clients, according to the note.

ADT's expansion into do-it-yourself and ecommerce channels through ADT Blue offers a market opportunity to capture value-conscious clients while expanding its addressable market, the firm said. By treating DIY clients as entry points into the ADT+ ecosystem, the company can drive subscriber additions, expected to boost long-term earnings, according to the note.

The brokerage said it reiterated its sector perform rating on the stock and price target of $9 per share.

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