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Axon Enterprise (AXON) Banks on Solid Product Demand Amid Risks
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Axon Enterprise, Inc. (AXON - Free Report) has been witnessing solid momentum in its TASER segment, driven by growing orders for devices and cartridge products. Stable demand for virtual reality training services has also been supporting the segment’s growth. Also, solid momentum in Axon Evidence and cloud services, driven by increased number of users, average revenue per user and software add-ons, is driving the Software & Sensors segment’s growth.
The company’s investments in product innovations, automation and manufacturing efficiency are expected to drive growth. For instance, AXON launched its next-generation body-worn camera, Axon Body 4, in April 2023. With upgraded features such as a bi-directional communications facility and a point-of-view camera module option, this body camera has been generating significant demand, thus bolstering the segment’s growth.
Axon believes in adding complementary businesses to its portfolio via acquisitions. Its acquisition of Sky-Hero (July 2023), an innovator in drones and ground-based vehicles, expanded Axon Air portfolio. The buyout expanded Axon Enterprise’s capabilities to protect life and helps the company move ahead in its moonshot goal.
Given strength across its business, management provided a bullish guidance for 2024. The company expects revenues in the range of $1.88-$1.94 billion, indicating growth of approximately 20-24% from a year ago. It expects adjusted EBITDA of $410-$430 million in 2024 with a margin expansion from 2023.
Image Source: Zacks Investment Research
In the past three months, this Zacks Rank #3 (Hold) company has gained 24.7% compared with the industry’s 12.9% growth.
Despite the positives, AXON has been grappling with tepid demand for TASER 7-series. In fourth-quarter 2023, sales from TASER 7 remained flat quarter over quarter. Also, hefty investments in research and development may dent Axon Enterprise’s bottom line and weigh on profitability. In 2023, it incurred research and development expenses of $303.7 million, up 29.9% year over year.
AXON’s extensive presence across international markets also exposes it to risks from negative foreign currency translations. A strengthening U.S. dollar might adversely impact its profit margins in locations outside the United States.
Key Picks
Some better-ranked stocks from the same space are presented below.
MSA Safety Incorporated (MSA - Free Report) sports a Zacks Rank #1 (Strong Buy). MSA delivered a trailing four-quarter average earnings surprise of 21.8%. In the past 60 days, the Zacks Consensus Estimate for its 2024 earnings has increased 4.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cadre Holdings, Inc. (CDRE - Free Report) presently has a Zacks Rank of 2 (Buy). CDRE delivered a trailing four-quarter average earnings surprise of 45.6%. In the past 60 days, the Zacks Consensus Estimate for Cadre’s 2024 earnings has increased 7.3%.
Powell Industries, Inc. (POWL - Free Report) presently carries a Zacks Rank #2 and has a trailing four-quarter earnings surprise of 77.6%, on average. The Zacks Consensus Estimate for POWL’s fiscal 2024 (ending September 2024) earnings has been stable in the past 60 days.
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Axon Enterprise (AXON) Banks on Solid Product Demand Amid Risks
Axon Enterprise, Inc. (AXON - Free Report) has been witnessing solid momentum in its TASER segment, driven by growing orders for devices and cartridge products. Stable demand for virtual reality training services has also been supporting the segment’s growth. Also, solid momentum in Axon Evidence and cloud services, driven by increased number of users, average revenue per user and software add-ons, is driving the Software & Sensors segment’s growth.
The company’s investments in product innovations, automation and manufacturing efficiency are expected to drive growth. For instance, AXON launched its next-generation body-worn camera, Axon Body 4, in April 2023. With upgraded features such as a bi-directional communications facility and a point-of-view camera module option, this body camera has been generating significant demand, thus bolstering the segment’s growth.
Axon believes in adding complementary businesses to its portfolio via acquisitions. Its acquisition of Sky-Hero (July 2023), an innovator in drones and ground-based vehicles, expanded Axon Air portfolio. The buyout expanded Axon Enterprise’s capabilities to protect life and helps the company move ahead in its moonshot goal.
Given strength across its business, management provided a bullish guidance for 2024. The company expects revenues in the range of $1.88-$1.94 billion, indicating growth of approximately 20-24% from a year ago. It expects adjusted EBITDA of $410-$430 million in 2024 with a margin expansion from 2023.
Image Source: Zacks Investment Research
In the past three months, this Zacks Rank #3 (Hold) company has gained 24.7% compared with the industry’s 12.9% growth.
Despite the positives, AXON has been grappling with tepid demand for TASER 7-series. In fourth-quarter 2023, sales from TASER 7 remained flat quarter over quarter. Also, hefty investments in research and development may dent Axon Enterprise’s bottom line and weigh on profitability. In 2023, it incurred research and development expenses of $303.7 million, up 29.9% year over year.
AXON’s extensive presence across international markets also exposes it to risks from negative foreign currency translations. A strengthening U.S. dollar might adversely impact its profit margins in locations outside the United States.
Key Picks
Some better-ranked stocks from the same space are presented below.
MSA Safety Incorporated (MSA - Free Report) sports a Zacks Rank #1 (Strong Buy). MSA delivered a trailing four-quarter average earnings surprise of 21.8%. In the past 60 days, the Zacks Consensus Estimate for its 2024 earnings has increased 4.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cadre Holdings, Inc. (CDRE - Free Report) presently has a Zacks Rank of 2 (Buy). CDRE delivered a trailing four-quarter average earnings surprise of 45.6%. In the past 60 days, the Zacks Consensus Estimate for Cadre’s 2024 earnings has increased 7.3%.
Powell Industries, Inc. (POWL - Free Report) presently carries a Zacks Rank #2 and has a trailing four-quarter earnings surprise of 77.6%, on average. The Zacks Consensus Estimate for POWL’s fiscal 2024 (ending September 2024) earnings has been stable in the past 60 days.