Axon blew past first-quarter earnings estimates after Monday's close, while announcing a deal to buy "airspace security" leader Dedrone. Axon stock cooled off a touch early Tuesday, but shares held near a buy point that the Taser innovator and provider of other leading-edge law-enforcement technologies reclaimed in Monday's regular session.
In a Tuesday note, William Blair analyst Jonathan Ho noted that Axon may have traded down partly because future contracted revenue dipped 1.5% sequentially, the first decline in at least five years. Still, Ho said that Axon management described its sales pipeline as "the strongest and healthiest it has ever been across all major customer segments."
Dedrone Acquisition
The Taser stun-gun and Axon body camera maker has continually expanded its target markets and took another step with the deal for Dedrone, whose terms weren't disclosed.
"Together, we will accelerate our efforts in creating a more advanced end-to-end drone solution that enables the good drones to fly and helps ensure the bad ones don't," CEO Rick Smith said in a statement.
Ho noted that Axon sees the Dedrone deal expanding its potential market opportunity by $14 billion to $77 billion. The drone defense startup's technology will allow Axon "to enable faster response times and improve decision-making in emergency situations" for first responders, Ho wrote.
AI-Generated Police Reports
Axon already cleared an early entry last week on momentum from its April 21-25 Axon Week event, highlighted by the unveiling of Draft One. The generative AI takes audio input that has been uploaded to the cloud from officers' body cameras to create a first draft of field reports "in literally just seconds," Ho wrote in an April 24 report.
"Axon believes it can save an average of an hour per day in report writing per officer," Ho wrote. He added that Draft One may incorporate video from body cameras to augment reports in the future.
Following Axon Week, JMP Securities hiked its Axon stock price target to 375 from 320, keeping an outperform rating. The firm is bullish on the potential for Axon VR training to grow adoption of the Taser 10 weapon released last year. It also touted the Feb. 1 acquisition of Fusus, a leader in real-time crime center technology that lets law enforcement officials manage developing situations remotely.
Axon Earnings
Estimates: Analysts expected Axon earnings per share to rise 8% to 95 cents, according to the FactSet consensus. Revenue was seen rising 29% to $441.6 million.
Results: Axon earnings grew 31% to $1.15 a share, 20 cents ahead of forecasts. Revenue jumped 34% to $460.7 million.
Outlook: For the full year, Axon raised its revenue outlook to a range of $1.94 billion to $1.99 billion from a prior range of $1.88 billion to $1.94 billion.
Management bumped up Axon's capital spending plan to a range of $80 million to $95 million from $60 million to $75 million, as it accelerates its capacity expansion to meet higher demand for its newest Taser.
Axon Flashed Early Entry Last Week
Axon slipped 2.3% to 320.10 early Tuesday, after climbing 2.9% to 327.64 in Monday stock market action.
The security tech company's stock has a 325.63 buy point from a prior flat base, according to a MarketSurge analysis.
Early last week, Axon flashed an early entry near 308, as it reclaimed its 10-week moving average, while breaking a trendline sloping down from its April 11 high.
Ahead of earnings, Axon's Relative Strength line, the blue line in IBD charts that tracks its progress vs. the S&P 500, hit new highs ahead of a possible breakout in a validation of its market leadership.
Axon is part of the flagship IBD 50 list of leading growth stocks.
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