Axon is Monday's IBD Stock Of The Day after the Scottsdale, Ariz., company's unveiling last week of its next-generation Taser touted as a "giant leap" ahead for the weapon that gives law enforcement a less-lethal alternative to bullets. Axon stock broke out to a 52-week high intraday, but erased gains by the close. Shares are still in range from another buy point.
Axon stock, the focus of IBD's latest New America profile, had already been a top-performer before the Taser 10 news. The company's full product line, including body-worn cameras and cloud-based software for managing police evidence, records and communications, has been selling well.
Axon Sales Momentum
Axon has three straight quarters of above 30% sales growth, fueled partly by success selling to the federal government and in international markets.
Fourth-quarter results should show continued strength. In a Jan. 19 note, Northcoast Research analyst Keith Housum wrote that Axon saw one of its strongest-ever quarters for bookings. Axon's 75 contracts totaled $221 million, up 53% from a year ago, he said, citing proprietary data.
"These guys are recession-resistant," Housum told IBD. That's partly because their products are geared toward safety and productivity, which means police departments are unlikely to cancel their contracts with Axon.
In Q3, as an example, Axon's net revenue retention equaled 120%. That means customers aren't just keeping their contracts, but continuing to get higher-cost bundles of services.
Solid local government budgets also should support growth, Housum said. "I don't think you see lean budgets until late 2024."
Axon In The News
The release of police video on Friday showing the beating that killed Tyre Nichols also might be drawing attention to Axon stock. The week after video showed the killing of George Floyd by a Minneapolis police officer, Axon stock surged 22% on expectations it would drive more spending on body-worn cameras.
Part of Axon's mission is to "never miss a moment." That means making sure its cameras record key events. Axon offers a "final fail-safe," which enables authorized users to retrieve missed video when the "video recall" function is turned on.
Memphis Police officers inflicted multiple blows to Nichols' head. They also used a Taser on him. Like any weapon, a Taser is subject to misuse.
Taser 10 Details
But it's possible that the Taser 10 may address some concern over its use by law enforcement. In a news release introducing the advances of its new Taser 10, Axon said the weapon "avoids delivering more charge than necessary."
A Taser 7 carries four probes and shoots two probes at a time. If both make contact, they can deliver about 2,000 volts per pulse to create neuromuscular incapacitation. The Taser 10, which carries 10 probes in its magazine and doesn't require reloading, fires one at a time. Like the Taser 7, two hits are required to deliver a charge, but that charge is 1,000 volts. A maximum of 2,000 volts can be delivered if four probes make contact.
The Taser 10 nearly doubles the range of prior weapons to 45 feet. It "drastically improves accuracy and effectiveness, expanding the scenarios in which it can be used," Axon said. Axon's new Taser also builds in features to de-escalate confrontations. These include a 1,000-lumen pulsing light and loud alerts to warn a subject to comply.
Pricing and timing of the Taser 10's broader availability haven't been disclosed. Axon provides the Taser 7 to U.S. law enforcement agencies through a subscription model. The premium bundle, which includes the Axon Body 3 camera and software, costs $249 per officer per month.
Axon Stock
Axon Enterprise rose as high as 198.40 intraday in Monday's market action. That move lifted Axon stock past a 193.95 buy point from a cup base. But shares erased gains, closing down 0.1% to 191.46
On a weekly chart, Axon stock is still in range from a 189.72 cup-with-handle buy point cleared on Jan. 23.
Axon was featured as IBD Stock Of The Day on Dec. 29. The article noted that Axon stock had found support at its 50-day moving average, offering a potential early entry point of 172.48.
Axon stock is part of the IBD Leaderboard portfolio of elite stocks. It's also part of the flagship IBD 50 list.
