Axon Enterprise Upgrade by Morgan Stanley
Investing.com – Morgan Stanley has upgraded Axon Enterprise Inc (NASDAQ:AXON) to "overweight," raising its target price by $200 to $700, driven by expected strong growth from an expanding software portfolio and increased adoption of AI solutions.
As of early trading, Axon shares rose 1.6% to $646.
According to Morgan Stanley's analysts, Axon's revenue growth of 25-30% appears more sustainable in the long term due to the rising adoption of higher-priced software bundles, including officer safety plans, along with new offerings like drones and license plate readers.
Axon’s established relationships with large public safety departments create barriers for competitors.
The analysts highlighted that Axon’s total addressable market (TAM) of $77 billion is still largely untapped. Their AI product, Draft One, recently generated a $100 million pipeline just three months after its launch.
Morgan Stanley expressed increased confidence in Axon’s AI portfolio driving value for other products, which may lead to further valuation increases.
Despite Axon's stock soaring approximately 150% year-to-date, its valuation is high at about 14.5 times its estimated 2026 sales. Morgan Stanley notes that with growth averaging over 40% in the past five years, the recurring nature of the business supports a credible expectation of 30% growth rates. This, coupled with the uniqueness of Axon’s assets, can sustain a premium valuation.
Axon is well-positioned in the public safety sector due to police departments increasing tech budgets and a scarcity of competitors providing similar software solutions. However, reliance on public tax revenues, regulatory changes, and slower-than-expected adoption of new technologies present potential risks.
Comments (0)