Having already landed a spot on the IBD 50 and IBD Big Cap 20, Taser maker Axon Enterprise just secured its place on the Investor's Business Daily Breakout Stocks Index. Now with quarterly earnings due May 13, Axon stock puts two key metrics — plus one telltale clue in its chart — in focus.
Currently earning the highest-possible 99 Composite Rating from IBD, the stock is in recovery mode, building on the largest deal in company history, signed in February.
Deploying Axon AI
Based in Scottsdale, Ariz., Axon says its moonshot goal is to cut gun-related deaths between police and the public by 50% before 2033. The company's product lineup includes Taser energy devices, body cameras and in-car cameras. It also offers cloud-hosted digital evidence management solutions.
Through Axon AI, the company is deploying artificial intelligence to improve response times, decision-making and resource allocation. In October, Axon launched its AI Era plan aimed at transforming public safety in ways ranging to from securing airspace against drone threats to streamlining evidence reviews to slashing time spent on filing paper work.
See Who Joins Axon On The IBD Breakout Stocks Index
Three Clues To Watch For Axon Stock
Set to report first-quarter earnings in less than a month, analysts see growth slowing in Axon's next report.
When it reported fourth-quarter results on Feb. 25, Axon beat analyst estimates for both its top and bottom lines. The company saw sales rise 34% to over $575 million, topping forecasts of a 31% gain to $566 million. Earnings growth spiked 49% to $1.67 per share, marking a second quarter of acceleration.
For the first quarter, analysts forecast an 11% rise in earnings to $1.28 per share. Revenue is expected to rise 27% to $585.7 million.
Axon stock got zapped on its fourth-quarter report, slicing below its 50-day moving average. But it's looking to get back on target, flashing three potentially promising signs as it works on a new consolidation showing a 715.99 buy point.
First, Axon stock has managed to get back above its 50-day moving average, an important step ahead of any breakout. It is, however, testing support at that line early Wednesday. Second, its relative strength line is on the upswing and within striking distance of a 52-week high.
Finally, Axon stock has reset its base count, meaning the new chart pattern is a first-stage base. A reset comes when a stock undercuts the low in its prior base, as Axon did in February as it sold off following its earnings report. The new first-stage setup gives Axon a fresh start, which could lead to a renewed rise.
But continued volatility in market indexes sounds a clear warning sign to investors looking to make purchases in the current environment. While Axon's AI plans have sparked interest on Wall Street, investors need to remained armed with rules for both how to buy stocks and when to sell stocks.
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Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
