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Here's Why You Should Invest in Axon Enterprise (AXON) Now
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Axon Enterprise, Inc. (AXON - Free Report) is well-poised for growth, courtesy of strength across its end markets, solid demand environment, acquisitions and strategic partnerships. The company remains focused on investing in growth opportunities and solidifying its long-term market position.
This Zacks Rank #2 (Buy) company has a market capitalization of $27.8 billion. Over the past six months, its shares have risen 35.9% compared with the industry’s 13.8% growth.
Image Source: Zacks Investment Research
Let’s delve into the factors that have been aiding the company for a while now.
Business Strength: AXON has been benefiting from strength in its TASER segment, driven by strong orders for devices and cartridge products. Stable demand for virtual reality training services also supports the segment’s growth. In 2023, the company launched its next-generation energy device, TASER 10. Shipment of this product began earlier this year and the strong customer response is contributing to the growth of the TASER segment.
An increase in the aggregate number of users and average revenue per user, driven by the increased adoption of software applications, is also driving the Software & Sensors segment’s growth. In the second quarter, revenues from TASER and Software & Sensors segments increased 27.6% and 46.8%, respectively, on a year-over-year basis.
Solid 2024 View: With the strong response for Axon Body 4 camera and TASER 10 device, Axon Enterprise has provided bullish guidance for 2024. The company expects revenues to be in the range of $2.00-$2.05 billion, indicating growth of approximately 29.5% at the midpoint on a year-over-year basis. Adjusted EBITDA is projected to be in the band of $460-$475 million with strong margin expansion compared with 2023.
Acquisition Benefits: Axon Enterprise has been strengthening its business through acquisitions. The company’s acquisition of Sky-Hero (July 2023) expanded its Axon Air portfolio, which consists of the drone software and hardware portfolio. Also, in January 2024, AXON acquired Fusus, a leader in real-time crime center technology. The combination of Fusus’ real-time situational awareness expertise with Axon Enterprise’s public safety technology should enable the latter to boost its product portfolio.
Strategic Partnerships: The company remains focused on strategic collaborations to expand its product offerings and customer base. In June 2024, Axon Enterprise entered into a partnership with Skydio to introduce a comprehensive line of drones in public safety that includes a scalable Drone as a First Responder (DFR) solution.
The offering incorporates autonomous drones, onsite docking stations and integrated flight control solutions from Skydio and real-time operations, real-time crime center capabilities and evidence management solutions from Axon Enterprise. The combined offering should support AXON’s DFR programs and strengthen its market position in this category.
Allegion delivered a trailing four-quarter average earnings surprise of 10.3%. In the past 60 days, the Zacks Consensus Estimate for 2024 earnings has increased 1.1%.
Applied Industrial delivered a trailing four-quarter average earnings surprise of 8.2%. In the past 60 days, the consensus estimate for 2024 earnings has remained stable.
Crane delivered a trailing four-quarter average earnings surprise of 11.2%. In the past 60 days, the Zacks Consensus Estimate for 2024 earnings has increased 1.6%.
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Here's Why You Should Invest in Axon Enterprise (AXON) Now
Axon Enterprise, Inc. (AXON - Free Report) is well-poised for growth, courtesy of strength across its end markets, solid demand environment, acquisitions and strategic partnerships. The company remains focused on investing in growth opportunities and solidifying its long-term market position.
This Zacks Rank #2 (Buy) company has a market capitalization of $27.8 billion. Over the past six months, its shares have risen 35.9% compared with the industry’s 13.8% growth.
Image Source: Zacks Investment Research
Let’s delve into the factors that have been aiding the company for a while now.
Business Strength: AXON has been benefiting from strength in its TASER segment, driven by strong orders for devices and cartridge products. Stable demand for virtual reality training services also supports the segment’s growth. In 2023, the company launched its next-generation energy device, TASER 10. Shipment of this product began earlier this year and the strong customer response is contributing to the growth of the TASER segment.
An increase in the aggregate number of users and average revenue per user, driven by the increased adoption of software applications, is also driving the Software & Sensors segment’s growth. In the second quarter, revenues from TASER and Software & Sensors segments increased 27.6% and 46.8%, respectively, on a year-over-year basis.
Solid 2024 View: With the strong response for Axon Body 4 camera and TASER 10 device, Axon Enterprise has provided bullish guidance for 2024. The company expects revenues to be in the range of $2.00-$2.05 billion, indicating growth of approximately 29.5% at the midpoint on a year-over-year basis. Adjusted EBITDA is projected to be in the band of $460-$475 million with strong margin expansion compared with 2023.
Acquisition Benefits: Axon Enterprise has been strengthening its business through acquisitions. The company’s acquisition of Sky-Hero (July 2023) expanded its Axon Air portfolio, which consists of the drone software and hardware portfolio. Also, in January 2024, AXON acquired Fusus, a leader in real-time crime center technology. The combination of Fusus’ real-time situational awareness expertise with Axon Enterprise’s public safety technology should enable the latter to boost its product portfolio.
Strategic Partnerships: The company remains focused on strategic collaborations to expand its product offerings and customer base. In June 2024, Axon Enterprise entered into a partnership with Skydio to introduce a comprehensive line of drones in public safety that includes a scalable Drone as a First Responder (DFR) solution.
The offering incorporates autonomous drones, onsite docking stations and integrated flight control solutions from Skydio and real-time operations, real-time crime center capabilities and evidence management solutions from Axon Enterprise. The combined offering should support AXON’s DFR programs and strengthen its market position in this category.
Other Stocks to Consider
We have highlighted three other top-ranked stocks, namely Allegion plc (ALLE - Free Report) , Applied Industrial Technologies (AIT - Free Report) and Crane Company (CR - Free Report) , each carrying a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Allegion delivered a trailing four-quarter average earnings surprise of 10.3%. In the past 60 days, the Zacks Consensus Estimate for 2024 earnings has increased 1.1%.
Applied Industrial delivered a trailing four-quarter average earnings surprise of 8.2%. In the past 60 days, the consensus estimate for 2024 earnings has remained stable.
Crane delivered a trailing four-quarter average earnings surprise of 11.2%. In the past 60 days, the Zacks Consensus Estimate for 2024 earnings has increased 1.6%.