Baird raises Axon stock price target, keeps Outperform rating By Investing.com

Baird has maintained its Outperform rating on Axon Enterprise (NASDAQ: NASDAQ:), while increasing the stock’s price target to $400 from the previous $360.

The firm’s analysts visited the company last week and expressed a continued bullish stance on the stock due to various growth opportunities anticipated in both the near and long term.

The analyst highlighted the potential for new artificial intelligence capabilities to act as a catalyst for Axon’s growth in the upcoming quarters. Additionally, emerging opportunities in the enterprise sector and drone technology are expected to add long-term value.

The optimism is built upon the solid growth from Axon’s core products, including the Taser 10, Body Camera 4, and its software solutions.

Axon’s software segment has shown impressive growth, with a 47% year-over-year increase in the second quarter, now approaching an annualized revenue of nearly $800 million.

The firm’s decision to raise the price target reflects confidence in the company’s continued expansion and innovation in its product offerings.

The analyst’s visit with Axon Enterprise provided insights into the company’s strategic direction, reinforcing Baird’s positive outlook. The firm’s analysis suggests that Axon’s diversified growth avenues, from its traditional products to new technological advancements, position the company favorably in the market.

In other recent news, Axon Enterprise reported a record-breaking second quarter, with revenue exceeding $500 million and new business bookings surpassing $1 billion.

The company’s robust growth was driven by new products, TASER 10 and Axon Body 4, and a shift in revenue mix, with software and services accounting for 39% of total revenue. Axon also secured its largest records contract to date and saw its international bookings double.

The company’s future contracted revenue stands at approximately $7.4 billion, and full-year revenue guidance has been raised to between $2 billion and $2.05 billion. Axon’s adjusted EBITDA reached $123 million, with a margin of 24.5% for the quarter.

Despite these positive developments, executives expressed cautiousness regarding potential economic downturns. However, they also highlighted the fastest growth in their Cloud and Services segment at 47% year-over-year, and an increase in Annual Recurring Revenue (ARR) to $850 million, a 44% increase year-over-year.

InvestingPro Insights

Adding to Baird’s optimistic assessment, InvestingPro data underscores Axon Enterprise’s robust financial health and market potential. Notably, Axon’s market capitalization stands at a substantial $27.54 billion, reflecting the market’s confidence in the company. The company’s impressive revenue growth of over 32% in the last twelve months as of Q2 2024 further validates the potential that Baird sees in Axon’s growth opportunities. Additionally, the gross profit margin of nearly 60% during the same period indicates a strong ability to translate sales into profitability.

An InvestingPro Tip that aligns with the article’s positive tone is the expectation of net income growth this year, which could be a significant factor in driving the stock price upward. Moreover, analysts have revised their earnings upwards for the upcoming period, indicating a consensus that Axon’s financial performance may exceed previous expectations. These insights, along with 19 additional InvestingPro Tips available at https://www.investing.com/pro/AXON, provide a comprehensive view of why Axon Enterprise is seen as a favorable investment by market experts.

With a forward-looking P/E ratio of 94.38 and a PEG ratio that suggests the stock may be undervalued relative to its earnings growth (0.52), investors may find Axon’s valuation compelling. The InvestingPro Fair Value estimate of $254.44, contrasted with Baird’s price target of $400, offers a range for investors to consider when evaluating the stock’s potential. As Axon Enterprise continues to integrate advanced technologies and expand its market reach, these financial metrics and analyst insights may serve as valuable indicators for investors monitoring the company’s trajectory.

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