On Wednesday, Axon Enterprise, Inc. (NASDAQ:AXON) received a new Buy rating from Jefferies, accompanied by a price target of $385.00 per share. The firm highlighted Axon's robust growth prospects, including a projected 30%+ revenue increase, margin expansion, and potential upside scenarios that could significantly enhance earnings per share (EPS).
The price target is based on a forward price-to-earnings (PE) multiple of 66.3 times Jefferies' projected calendar year 2025 EPS of $5.80 for Axon. This multiple is notably higher than Axon's historical average forward PE multiple of 57.5 times over the past five years. The firm's positive outlook is partly due to their Draft One scenario analysis, which indicates the possibility of an incremental EPS power ranging from $1.70 to $3.40.
Jefferies emphasizes Axon's strong competitive position, noting that the company benefits from a "big competitive moat." This advantage is underpinned by the fact that 95% of Axon's sales come from subscriptions, providing a high level of sales visibility. Additionally, the firm estimates that 67% of the next twelve months' (NTM) sales are already accounted for in Future Contracted Revenue, based on a 20% revenue recognition ratio for NTM.
The Buy rating initiation by Jefferies reflects confidence in Axon's business model and future performance. The firm's analysis suggests that even in the most optimistic scenario of their Draft One analysis, the $385 price target would represent a PE multiple of 42 times the 2025 EPS, reinforcing the belief in the company's value and growth trajectory.
In other recent news, Axon Enterprise Inc. has been the focus of multiple financial discussions due to its promising growth trajectory. The company has consistently demonstrated robust revenue growth, with a 34% increase in Q1 FY24 revenue year-over-year, marking the ninth consecutive quarter where growth has exceeded 25%.
This performance led Axon to raise its FY24 revenue guidance to a 26% increase at the midpoint, indicating confidence in its business expansion strategies.
Analysts have also shown interest in Axon's performance. Barclays Capital Inc. rated the company as "Overweight" while JMP Securities maintained a "Market Outperform" rating. Craig-Hallum raised Axon's stock price target from $325.00 to $370.00, maintaining a Buy rating. These ratings reflect Axon's strong Q1 performance and the company's strategic moves, including the introduction of AI-driven report-writing software and the acquisition of Dedrone.
Axon's innovative product demonstrations, such as virtual reality applications and the TASER 10, are critical as the company navigates a competitive landscape. The company is also expected to benefit from increased global defense spending, which is likely to boost demand for Axon's technology-driven solutions.
These recent developments highlight Axon's potential for sustained growth and market penetration.
InvestingPro Insights
The latest insights from InvestingPro provide a real-time perspective on Axon Enterprise, Inc. (NASDAQ:AXON), complementing the optimistic outlook from Jefferies. With a substantial market capitalization of $24.11 billion and a high price-to-earnings (P/E) ratio of 90.86, Axon's financial health is underpinned by robust revenue growth of 31.69% over the last twelve months as of Q1 2024. This growth is further exemplified by a notable gross profit margin of 60.16%, showcasing the company's ability to maintain profitability despite its aggressive expansion.
InvestingPro Tips highlight that Axon holds more cash than debt on its balance sheet, which is a reassuring sign for investors considering the company's financial stability. Moreover, net income is expected to grow this year, aligning with Jefferies' projection of a 30%+ revenue increase. For those interested in deeper analysis, InvestingPro offers an array of additional tips for Axon, which can be found at https://www.investing.com/pro/AXON. Use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, and explore 19 more InvestingPro Tips that could further inform investment decisions.
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